Golden Waves, Silver Secrets: A Precious Metal Journey
As of January 7, 2025, gold (XAU/USD) is trading around $2,645, maintaining its upward trajectory as investors flock to safe-haven assets amid rising geopolitical tensions and inflation fears. The ongoing Russia-Ukraine conflict and instability in the Middle East have intensified risk-off sentiment, pushing gold to an intraday high of $2,645. Additionally, expectations surrounding inflationary pressures from proposed trade policies by US President-elect Donald Trump further enhance gold’s allure as a hedge against rising prices. However, the Federal Reserve’s cautious approach to interest rate cuts is tempering gold’s gains. Projections suggest a slower pace of easing in 2025, with policymakers expressing concerns about persistent inflation. This has led to a rise in the 10-year US Treasury yield, reaching an eight-month high, which strengthens the US dollar and negatively impacts gold prices since it yields no interest.
Even in MCX Gold, as charts indicate, a narrow range formed, which need a breakout level.
Gold has support at 76600—76000 on the Daily chart and the resistance zone is 78000—79200. Breakout will be awaited for positional trade. There is little hope for gold to close below 76000 this week and it is expected that a bounce can be seen from the support once again.
Silver Shines Brightly In tandem with gold, silver (XAG/USD) is trading near $30.20, buoyed by similar factors. It reached an intraday high of $30.24, driven by safe-haven demand and expectations of increased hedging against economic uncertainty. Just like gold, silver is benefiting from concerns over inflation and ongoing geopolitical conflicts. The relationship between gold and silver is evident; when gold prices rise, silver typically follows suit due to their shared status as safe-haven assets. The Gold/Silver ratio—which indicates how many ounces of silver are needed to equal the value of one ounce of gold—can provide insights into their relative valuation. A high ratio may suggest that silver is undervalued compared to gold, while a low ratio could imply that gold is undervalued relative to silver.
- Gold/Silver Ratio:
The Gold/Silver ratio indicates how many ounces of silver are required to match the value of one ounce of gold, serving as a tool to assess the relative valuation of both metals. A high ratio may lead some investors to view silver as undervalued or gold as overvalued. Conversely, a low ratio could imply that gold is undervalued in comparison to silver.
As traders await key events like the FOMC meeting minutes and the US Nonfarm Payrolls report, these factors will likely influence both gold and silver prices in the coming days. The interplay between geopolitical risks, inflation expectations, and Federal Reserve policies continues to shape the landscape for these precious metals.
Until then, Happy Trading!
Commodity Samachar Securities
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