- Gold and Silver prices reach new highs amidst a rising US Dollar, driven by global uncertainties and a potential Trump Presidency.
- Silver’s demand/supply dynamics bode well for further gains.
- The US Dollar Index (DXY) strengthens due to positive economic data and fading rate cut expectations, with a potential rise to 105.00.
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Gold prices have smashed through the 2750 handle despite the US Dollar continuing its advance. The precious metal has attracted bids with some believing this could be down to markets preparing for a potential Trump Presidency in the US.
There does not appear to be a single factor driving Gold prices but rather a combination of rising uncertainties for global market participants to consider. Global conflicts, trade wars and a potential Trump Presidency are at the forefront and that is leaving out the uncertain economic situation in many countries.
Despite sky high stock prices in the US and what seems to be improving sentiment, Gold, a notorious safe haven bet reveals a different story. Gold prices have been on a tear this year and with many people still viewing the precious metal as a safe haven, are market participants telling us something?
Silver (XAG/USD) Demand/Supply Dynamics Bodes Well for Bulls
A commodity that has flown under the radar of late has been silver, as prices soared to new all time highs. Silver is trading in the mid 34’s at present with market analysts noting that more gains could be in store for silver prices.
Looking more closely at Silver, the appeal is quite evident. Silver is used in a host of electronic products manufactured today and the rise of tech is only going to increase the demand for silver.
Given the physical shortage already present in silver markets there is a huge possibility that the rally could continue. Looking at the chart below, you can see the huge discrepancy between demand (blue line) and supply (white line) which I expect will underpin prices moving forward.
Source: LSEG Workspace
US Dollar Index (DXY) Eyes a Rise to 105.00 Key Level
The US Dollar continues its rise on positive data and fading rate cut expectations. Markets have been digesting comments from Fed Policymakers over the last week or so which has largely leaned on the hawkish side.
As markets adapt to fewer anticipated rate cuts in the US compared to more aggressive cuts by other central banks, the US Dollar may be set to keep rising. There is growing talk of a ‘Trump trade’ as US Treasury yields have experienced some interesting swings off late. This may be another area to focus on when looking at the greenback moving toward the US election.
US Dollar Index (DXY) Daily Chart, October 23, 2024
Source: TradingView
Technical Analysis Gold (XAU/USD)
From a technical analysis standpoint, Gold continues to print fresh highs and languish in overbought territory. As we know markets are able to languish in overbought territories for extended periods of time and thus the Gold rally could continue.
Gold is currently flirting with the key level at 2750 with a drop lower opening up a retest of the support area at 2739. Lower down we could look at areas of support around 2724 and 2714.
The upside provides us with less insight with today’s highs at 2758 an area to keep an eye on before the psychological level at 2775.
GOLD (XAU/USD) Four-Hour (H4) Chart, October 23, 2024
Source: TradingView (click to enlarge)
Support
- 2739
- 2724
- 2714
Resistance
- 2758
- 2775
- 2800
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Zain Vawda
He has spent the last 3 years in an analyst role honing his skills across various financial domains, including technical analysis, economic data interpretation, price action strategies, and analyzing the geopolitical impacts on global markets. Currently, Zain is advancing in obtaining his Capital Markets & Security Analyst (CMSA) designation through the Corporate Finance Institute (CFI), where he has completed modules in fixed income fundamentals, portfolio management fundamentals, equity market fundamentals, introduction to capital markets, and derivative fundamentals.
He is also a regular guest on radio and television programs in South Africa, providing insight into global markets and the economy. Additionally, he has contributed to the development of a financial markets course approved by BankSeta (Banking Sector Education and Training Authority) at NQF level 6 in South Africa.
