Gold prices found resistance at the $2,030 level after dipping from $2,070 early this month in January 2024. The prices of gold has remained in the green for two consecutive days and is attracting bullish sentiments in the indices. The yellow metal delivered good gains at the start of 2024 and could continue churning out profits in the coming months. The XAU/USD Spot Gold prices could continue to rise if they hold on tight and consolidate at the current $2,030 level.
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So why are gold prices rising despite the broader market experiencing corrections? In this article, we will highlight why the prices of gold are rising today.
Why Gold Prices Are Shooting Up?
Gold prices are shooting as amid the weakening of the US dollar this month. The US dollar Index (DXY) slipped dangerously low to 102 points on Thursday and another leg down could take the USD below 100. The dollar remains on a slippery slope due to the Feds turning dovish and pausing interest rate hikes.
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In addition, the US Treasury yields dipped after the first week of January making gains turn minimal for institutional investors. Therefore, the investments flowed into the gold market as it acts as a hedge against inflation. The Feds remain dovish now as they try to bring down inflation under the 2% benchmark.
The CPI data from last year showed inflation at 6.5% and cooled down to 3.3% by the end of 2023. Technically, the gold bulls remain cautious as the US dollar could bounce back if inflation is brought under control.
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Read here for a realistic price prediction on how high gold prices could hit this year in 2024. The commodity markets are receiving a good inflow of funds as US equities are trading in the red. The move signals a shift in investor sentiments making gold to be perceived as the best alternative.