Gold prices are currently in a holding pattern as investors await clearer signals on US interest rate movements and the strength of the US Dollar, according to a report by Emkay Wealth Management.
The report highlights that two key triggers—interest rate direction and dollar weakness—remain uncertain, limiting upward momentum in gold.
“As of now, the impact of US interest rates on consumer prices is still unclear, which means a major catalyst for gold’s rally is missing,” the report stated.
The inverse relationship between gold and the US Dollar continues to play a critical role. A weakening dollar—typically driven by falling US yields—makes gold more attractive to holders of other currencies. However, recent strength in the dollar and firm bond yields have put downward pressure on gold prices.
Technical support for gold has been identified at USD 3,297 and USD 3,248, the report added.
Emkay also pointed to concerns around the US government’s $4.6 trillion budgeted spending, warning that increased borrowing could push yields higher, complicating gold’s outlook. “Rate cuts and declining market yields would be necessary for the dollar to weaken and for gold prices to firm up,” the report noted.
A pattern of consolidation is also being observed in the bullion market, which often precedes a potential upward breakout.
Earlier this year, Chinese buying provided a significant boost to gold prices, but this factor diminished after reported sell-offs in late April and early May.
The report concludes that gold’s next major rally may only resume once there is clarity on US monetary policy and sustained dollar weakness.