GOLD Analysis
Gold Holds Near $3,308 as Safe-Haven Demand Persists Amid Fiscal and Geopolitical Risks
Highlights
- U.S. budget deficits, Moody’s sovereign downgrade, and Fed caution keep gold bid at $3,308/oz amid safe-haven flows.
- Middle East tensions and Russia-Ukraine ceasefire talks sustain geopolitical support, while Chinese imports hit an 11-month high.
- Key technical pivots updated: support at $3,290/$3,270 and resistance at $3,350/$3,380 guide buy-on-dips strategy.
Overview:
Gold traded around $3,308 per ounce, having eased from its intra-day highs as investors continued to seek refuge amid a complex mix of fiscal, monetary, and geopolitical uncertainties. The latest U.S. federal budget proposal, which projects a sizeable increase in the deficit, combined with Moody’s downgrade of the U.S. sovereign credit rating, has weighed on confidence in dollar-denominated assets and bolstered gold’s safe-haven bid. Meanwhile, the Federal Reserve’s cautious forward guidance—highlighting persistent inflation and growth risks—has kept real yields subdued, further underpinning bullion.
Geopolitically, tensions in the Middle East remain elevated over potential Israeli-Iranian confrontations, even as Russia-Ukraine ceasefire discussions proceed without direct U.S. facilitation. Each flashpoint reinforces gold’s appeal as a hedge against supply-shock and conflict-driven volatility.
On the demand side, Chinese gold imports have surged to an 11-month high, driven by both consumer and ETF purchases under newly expanded import quotas. This resilience in Asia underscores gold’s dual role as a store of value and portfolio diversifier amid ongoing U.S.-China trade frictions.
Looking ahead, market participants will parse a busy economic calendar. In Europe, German flash PMIs and the ifo Business Climate survey will indicate industrial and consumer sentiment, while from the U.S., weekly jobless claims, flash Services and Manufacturing PMIs, and Existing Home Sales will inform the Fed’s rate outlook.
Technical Levels (CMP $3,308)
- Support: $3,292 (S1) & 3269 (S2)
- Resistance: $3,350 (recent swing highs), $3,380 (psychological cap)
- MCX Support/Resistance: ₹94,200 / ₹95,800
Given the pullback from morning highs, a Sell – on - rise approach into the $3,320 zone—targeting $3,260 with a stop-loss above $3,331—balances the risk/reward profile in this volatile backdrop