Gold hits 1-week high as safe-haven demand returns, but still down 4.4% in November. Should you invest now?

Gold regained momentum as prices extended their rally to the second session on Tuesday, reaching a one-week high of ₹75,545 on MCX and $2,632 on Comex, marking a 0.68% gain. This comes after a nearly 2% gain in the previous session, fueled by rising tensions between Russia and Ukraine and a weaker dollar, both of which helped drive the precious metal's upward movement.

Additionally, a Goldman Sachs report projecting a gold price target of $3,000 per ounce by December 2025 further boosted the sentiment, signalling a bullish outlook for the yellow metal after it faced pressure from a strengthening US dollar.

Although gold has resumed its winning streak in recent sessions, it is still down 4.4% for the month so far, marking the largest monthly drop since September 2024, when it fell by 4.71%.

For most of 2024, gold prices have maintained a strong upward trend, significantly outperforming major asset classes. This rally has been driven by several factors, including ongoing geopolitical tensions, rate cuts from major central banks, persistent trade disputes, and broader economic instability.

These factors have prompted investors to seek refuge in gold, pushing prices to a historic peak of ₹79,775 per 10 grams on the MCX and $2,800 per ounce on Comex. However, gold prices faced selling pressure starting October 31, and the selloff extended after Donald Trump's victory in the 2024 US presidential election, which strengthened the US dollar.

Fears that Trump's proposed tariff plans could fuel inflation and potentially delay the Federal Reserve's rate-easing cycle have contributed to this pressure. Higher interest rates make holding gold less attractive, as it is a non-yielding asset.

Furthermore, comments from Federal Reserve Chair Jerome Powell on Thursday, in which he stated that the central bank was 'not in a hurry' to cut interest rates, contributed to the downward pressure on gold prices. This resulted in a 4.54% drop last week, marking the biggest weekly decline in three years.

Nonetheless, gold staged a strong comeback this week, with Comex prices rising by over 2.47% so far. On the Multi Commodity Exchange (MCX), gold prices increased from ₹73,946 to ₹75,504 per 10 grams during the same period.

The key question now is whether gold will maintain its bullish trend or resume its losing streak this week, as several Federal Reserve officials are scheduled to speak, potentially offering insights into the future rate-cut trajectory.

Why Goldman is bullish on gold

Goldman Sachs on Monday reiterated its forecast for gold prices to rally to $3,000 an ounce by the end of 2025, with analysts urging investors to “go for gold,” as per a Bloomberg report. 

The bank listed a wager on bullion among its top commodity picks for 2025, citing Federal Reserve rate cuts that reduce the opportunity costs of holding gold; tariffs that underline its role as an inflation hedge; and steady demand from central banks.

While Trump’s win has clouded the outlook for rate reductions next year, given the potential for his policies to be inflationary, about half of swaps traders expect there will probably be a Fed cut next month before his inauguration, as per the Bloomberg report.

Key gold support and resistance levels

Jateen Trivedi, VP Research Analyst, Commodity and Currency, LKP Securities, said, “Gold traded strongly positive due to heightened geopolitical tensions between Russia and Ukraine. President Joe Biden's authorisation for Ukraine to use powerful American long-range weapons to strike within Russia escalated the conflict.”

"In response, Moscow deployed around 50,000 troops to the southern region of Kursk, further intensifying concerns. This geopolitical risk bolstered gold prices as investors turned to safe-haven assets. Key support for MCX gold is seen around ₹74,200–74,250, while resistance stands at ₹75,100," said Jateen Trivedi.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.