Fed minutes, West Asia conflict to guide bullion market: Analysts

Gold and silver prices are expected to remain positive next week, although elevated volatility is likely to persist amid developments in West Asia and key global economic data, analysts said.

Market participants will track US housing and trade data, inflation figures from the UK, Eurozone, and Japan, as well as China’s economic indicators for cues on industrial metals.

The minutes of the Federal Reserve’s FOMC meeting will also be watched for signals on the US Central bank’s monetary policy outlook, they added.

“The outlook for gold and silver remains positive and is expected to move up towards Rs 1.57 lakh per 10 grams and Rs 2.54 lakh per kg level,” Pranav Mer, Senior Vice President, EBG - Commodity & Currency Research, JM Financial Services Ltd, said.

On the domestic front, gold futures for October delivery climbed Rs 2,686, or nearly 2 per cent, last week to close at Rs 1.54 lakh per 10 grams on the Multi Commodity Exchange (MCX). MCX silver for September contract gained Rs 4,458, or 1.9 per cent, to Rs 2.35 lakh per kilogram.

“Gold traded higher this week, gaining 1 per cent, while the rally extended more than 2 per cent at the peak before profit-booking emerged at higher levels,” said Jateen Trivedi, VP Research Analyst — Commodity and Currency, LKP Securities.

MCX gold has gained nearly 9.5 per cent in August, making consolidation and intermittent profit-booking at higher levels more likely in the near term, he said.

In the international markets, Comex gold futures for December delivery rose $37.6, or nearly 1 per cent, last week to $4,437.3 per ounce. Silver went up $1.61, or 2.5 per cent, to $65.11 an ounce in New York.

Gold futures closed higher for the second consecutive week but remained consolidative after an 11 per cent rally from below $4,000 per ounce, Mer said.

Bullion prices found support as traders reduced bets on a September rate hike by the US Fed following weaker-than-expected non-farm payroll data and steady inflation, while other economic indicators remained mixed, he said.

Safe-haven demand also supported gold amid the West Asia conflict and the US-Iran tensions over the Strait of Hormuz, with no resolution to the conflict in sight, Mer added.

Silver also maintained a positive bias, though prices consolidated as the recent rally in industrial metals paused.

According to Trivedi, the US dollar, interest-rate expectations and geopolitical developments will remain the key drivers for bullion prices.