Gold to stay range-bound amid dollar, West Asia tensions, report analysts
Gold is likely to remain volatile and range-bound in the coming week as traders track movements in the US dollar and bond yields, developments in the West Asia conflict and the direction of crude oil prices, analysts said.
After a week dominated by monetary policy and geopolitical developments, investors will turn their focus to a fresh batch of economic data, including mid-month manufacturing and services Purchasing Managers’ Index (PMI readings) from major economies.
The data on US housing, durable goods orders and consumer sentiment readings due to be released towards the end of the week will also be closely watched for cues on the outlook for monetary policy and bullion demand, they added.
On the Multi Commodity Exchange (MCX), gold futures for October delivery rose Rs 1,597, or 1.04 per cent, last week to close at Rs 1.54 lakh per 10 grams. Silver futures gained Rs 6,629, or nearly 3 per cent, to end at Rs 2.41 lakh per kilogram.
“MCX gold witnessed a weak opening last week near Rs 1.5 lakh per 10 gram but staged a strong recovery towards Rs 1.54 lakh per 10 gram as buying interest emerged at lower levels,” Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said. The recovery followed a period of heightened volatility as markets digested major macroeconomic and geopolitical developments, he said.
“With several key events now behind us, attention will gradually shift towards how markets price the next phase of monetary policy and geopolitical risks,” Trivedi added.
In global markets, Comex gold futures for December delivery ended marginally higher at $4,424.9 per ounce, while silver gained 3 per cent to $67.15 in New York.
“Gold futures continued to trade steady as prices consolidated for the third straight week, but some bargain buying was seen at corrective levels in last couple of trading sessions to close the week in positive,” Pranav Mer, Senior Vice President, EBG - Commodity & Currency Research, JM Financial Services Ltd, said.
The US dollar index and Treasuries pared some gains as oil prices reversed mid-week following the Federal Reserve’s 25-basis-point rate hike, Mer said.
Investor demand has remained upbeat over the past 7-8 trading weeks, with continued inflows into gold exchange-traded funds across markets, he added.
Silver futures, meanwhile, tracked industrial metals, recovering from early declines and ending the week with strong gains.
With major central bank events now over, the focus will shift to the People’s Bank of China, which is expected to announce its monetary policy on Monday, with rates likely to remain unchanged, Mer said.
