The gold market drifted a little bit lower in the early hours on Wednesday, but quite frankly, I think we continue to see a lot of support in the $2,600 region. And the fact that we have bounced from there, not only on Tuesday but now on Wednesday in the early hours does suggest that there are buyers out there willing to get involved.
The market rallying from here does make quite a bit of sense because quite frankly there are a whole plethora of reasons for gold to go higher. The first one of course is central banks around the world cutting rates, which means lower interest rates, which means you don’t get paid as much to hold paper and therefore paying for storage of precious metals isn’t quite as unattractive.
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Furthermore, you have geopolitical issues. And with that being said, the geopolitics that come into the situation, essentially, we have nothing good going on right now around the world. So, it’s a certain amount of safety trading that will go into the gold market. India, China, Russia, and I believe Indonesia, although I might be remiss, are all buying gold. So that puts a little bit of a bid into the market anyway.
And then finally, the US dollar with the Federal Reserve cutting rates, it is a bit of an inflation play as well. Overall, you have the technical analysis looking strong and you have plenty of fundamental reasons to believe that the gold market will go higher. So, with that, I am a buyer of dips.
Source: Fxempire
