Gold prices in the international market have seen gains for the third consecutive trading day. On Friday, the price reached approximately $3330 per ounce. This surge comes at a time when trade tensions and economic uncertainty are deepening worldwide. Investors are once again turning to gold, which is traditionally considered a safe investment medium.
Gold Becomes a Safe Haven Amidst International Instability
While fluctuations continue in global stock markets and bond yields are volatile, gold is once again becoming a priority for investors. International trade tensions have escalated, particularly after US President Donald Trump announced a 35 percent tariff on imports from Canada and signaled the imposition of duties on other countries as well.
The Fed's Rate Cuts and the Dollar Index's Movement
The market is discussing whether this rally in gold prices can continue. A recent report by Emkay Wealth Management states that gold prices will be affected by two key factors: first, the interest rate policy of the US Federal Reserve, and second, the movement of the dollar index.
The report suggests that the possibility of the Fed cutting interest rates is increasing. In this situation, the value of the dollar may weaken, which will support gold.
Support Levels and Trends Mentioned in MK Wealth's Report
According to Emkay Wealth's report, gold prices are currently in a consolidation phase, which may be an indication of a potential future rise. Technically, gold may find b support at levels of $3297 and $3248 per ounce.
The report also states that gold has been under pressure in recent weeks due to the strength of the US dollar and the rise in bond yields, but now the situation is gradually changing.
Uncertainty Increased by US Tariff Policy
Signals of major changes in tariff policies by the US President have increased apprehension among investors. The new duties announced by Trump will come into effect from August 1st and will affect Canada as well as other trading partners.
In this situation, the market fears that global supply chains may be affected and inflationary pressures may increase. In such a case, central banks may also have to make changes in their monetary policy.
All Eyes on the Fed's Policies
Trump has demanded the Fed cut rates by up to 300 basis points. However, the Fed's current position remains cautious. There is no clarity regarding the impact of the new tariffs on retail prices in the US.
But the market opinion is that the Fed may cut rates once or twice by the end of the current year. The reasons behind this are weak inflation rates and declining consumer confidence.
Increased Possibility of a Decline in the Dollar Index
Emkay Wealth believes that if interest rates are cut, the dollar index may weaken further. The dollar index is currently at 97.00 and has fallen by approximately 10 percent since the beginning of this year.
The impact of this decline is starting to be seen on gold. Due to the weaker dollar, gold becomes cheaper in other currencies, which increases international demand. If this trend continues, further strengthening in gold prices may be seen.
