Weak Dollar, Central Bank Buying Fuel Next Big Move in Gold Prices

Vandana Bharti believes that weak dollar and central bank buying may trigger the next big move in gold prices. According to her, the rally cannot be dismissed as an overbought move due to currency weakness becoming a structural support for precious metals.

The traditional relationship between higher interest rates and a stronger dollar no longer applies cleanly, Bharti argues. Even after rate-hike signals, 'we haven't seen any kind of upside move in the dollar index,' she notes.

Bharti attributes this to changing behaviour of sovereign reserve managers. Trade tensions, the Russia-Ukraine war, and broader geopolitical fractures have created an environment 'against the dollar and US treasuries.' This has led to lower appetite for US debt and stronger interest in gold, with central banks being key drivers of demand.

Gold is considered a safe-haven asset, and its price remains resilient despite higher interest rates. Bharti expects the dollar to weaken further towards 95-96, which would keep gold attractive even in a high-rate environment.