Gold Prices on the Edge: Dollar Crash and Rate Cuts Could Fuel Massive Bull Run?

Gold’s much-anticipated rally is stuck in a wait-and-watch mode as traders and investors closely track US interest rate moves and dollar trends for clear triggers, according to a new report from Emkay Wealth Management.

The bullion market is currently focusing on a mix of drivers—including uncertainty over the direction of US interest rates and the potential weakness in the US dollar—which are seen as key signals for any sustained surge in gold prices.

"One of the major triggers for gold, the clear direction of US interest rates, is currently absent," the Emkay report noted. Rate cuts could potentially weaken the dollar, making gold cheaper for buyers using other currencies and sparking fresh demand.
 

Inverse Relation

Gold and the US dollar typically share an inverse relationship—when the dollar weakens, gold becomes more affordable internationally, often boosting demand and prices. However, the recent firmness in the dollar and rising US bond yields over the past fortnight have added downward pressure on gold.

The report also pointed out technical support levels for gold at USD 3,297 and USD 3,248, suggesting that prices could stabilize around these benchmarks if selling continues.

"What we need to see is a further fall in the dollar, driven by official rate cuts and lower market yields," Emkay Wealth Management explained. Yet the outlook is complicated by new US budgeted spending of around USD 4.60 trillion, which could lead to higher borrowing and keep yields elevated—potentially delaying any dollar weakness.

Adding to the complexity is the pattern of consolidation currently seen in the gold market. Historically, such phases often precede strong price moves once a clear direction emerges.

Earlier this year, gold prices surged thanks to heavy buying from China, but that support faded in late April and early May after China reported sell-offs. Emkay’s report suggests that while that factor is now less important in the big picture, the broader market remains poised for a move once macro triggers align.

Until then, investors will be watching for any signs of a shift in US interest rates, a sustained decline in the US dollar, and changes in bond yields to see if they can ignite the next massive gold bull run.

Also Read: HUL Stock Soars! New CEO Priya Nair Sparks Bullish Frenzy