Since early Aug, Gold prices have moved from 4000 levels to current 4600 odd levels. First the weak NFP on 5th Aug & last week, increase in long end bond buybacks announced by US treasury which has led to massive dollar depreciation & gaining of debasement trade. We were earlier of the view that Gold might see an upswing from Sep when we expected weak US data to start arriving in earnest. But now we believe that Gold has started it’s next significant up move cycle going towards it’s previous lifetime high (LTH) of 5595 levels in the next 1 year. Persistent inflation, policy uncertainty & continued reserve diversification are other tailwinds for our view. On DXY itself, by attempting to hold the price of longer-duration securities from falling, US treasury has allowed Dollar as the release valve to encourage foreign inflows to finance the US’s current account. Unconventional policy choices can amplify questions around institutional reliability even if those policies are intended to aid market functioning. From US macro data point of view too, DXY looks headed lower for longer. Lower realised inflaiton in months ahead, changes in PCE calculations from Sep, recent slowdown in US economic data specially NFPs, housing and retail sales are some of the macro indicators which are indicating US economy might be slowing down. Add to this the falling demand for US bonds from both private foreign investors as well as foreign governments and we either US treasury itself resorting to more quasi QE measures like last week or Fed itself embarking on a full QE. Hence, we won’t be surprised to see DXY making new lows of sub 96 levels by CY26 end as US elections in early Nov might bring in Democrats in both houses leading to a policy paralysis. This implies significant upside for Gold from current levels.From a demand perspective, central bank’s demand should re-emerge once we move beyond the inflation pressures, while concerns around fiscal dominance and rising term premia for safe haven treasuries should continue to support the broader fiat currency debasement narrative. Amid a backdrop of elevated geopolitical risk and a scarcity of effective hedges, we think gold has a strong chance of testing it’s LTH of 5500 levels by Mar’27. Comex net speculative positioning & rate sensitive Gold ETFs demand are both indicating the bull run in Gold is here to stay. Technically the 200 DMA at 4500 & the 100 DMA at 4380 should hold as a strong support and every dip is now a buying opportunity. First stop for the current rally is 5000 levels and eventually 5600. Stop to this view is a weekly close below 4200 which is the 50 DMA.
