Gold recovered somewhat from five-month lows on Friday as the dollar and bond yields fell. However, bullion was still on track for another weekly drop as strong US data bolstered expectations that the Federal Reserve will continue to raise interest rates. Spot gold fell to a five-month low of $1884 on Thursday as a result of good US economic data.
Spot gold was flat at $1,887.79 per ounce on Friday at 2:22 p.m. ET (1822 GMT), down 1.4% for the week. According to Reuters, US gold futures closed the day 0.1% higher at $1,916.5. Because of the dollar's 0.2% decrease, which capped losses for the day, gold became more affordable for holders of other currencies.
When the US dollar fell from its highs on Friday, gold prices in India surged on the Multi Commodity Exchange (MCX), mirroring the rise in worldwide prices.
Gold futures for October delivery closed 88 or 0.15% higher at 58,378 per 10 grammes, compared to the previous close of 58,290 and the beginning price of 58,370 on the MCX.
According to Sugandha Sachdeva, Executive Director & Chief Strategist at Acme Investment Advisors, the yellow metal may consolidate for a while after breaching the key $1900 per ounce mark, but it has crucial support at $1880 and then $1865 per ounce, or 57500 per 10 gm mark, and is likely to garner buying interest at lower levels. For the next week, markets will be focused on the Fed Chair's remarks at the Jackson Hole Symposium. This event may provide clarification on the central bank's stance and prospective rate hikes, which may influence market sentiment. Positive indicators may aid in the stabilisation of gold prices.
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Anuj Gupta, Head of Commodity and Currency Research at HDFC Securities
According to Gupta, gold prices are under pressure as the US dollar has risen in anticipation of a US Federal Reserve rate hike. The yellow metal has reached its lowest level in five months, while the US dollar has reached a nine-week high.
"However, we anticipate a rebound in the price of precious metals as the market has reached oversold territory." Friday's gold prices on the international market have firm support at $1860. If it holds above $1900 and closes above $1910, we can anticipate a rebound in the price of gold. On the MCX, gold prices have immediate support at 58,000 per 10 GM, while they have firm support at 57,500 per 10 GM. On the upside, gold faces imminent resistance between 58,700 and 59,200," Gupta added.
Sugandha Sachdeva, Executive Director & Chief Strategist at Acme Investment Advisors
According to Sachdeva, gold prices fell for a third consecutive week on foreign markets, hitting their lowest level since March, and for a second straight week on domestic markets. Weakness can be ascribed to the rising dollar index, which has risen for five straight weeks and surged to a two-month high, reducing demand for the traditional safe-haven commodity, gold. In spite of the robust state of the US economy, the value of the dollar has risen on fears that interest rates will remain high for a prolonged period of time. The Federal Reserve's (Fed) hawkish minutes from its most recent meeting issued this week bolstered expectations for additional monetary tightening in the United States. This resulted in a further increase in the dollar index and functioned as a ceiling on gold prices.
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However, gold's lacklustre demand persists despite China's slowing economy. Investment funds such as SPDR's global gold ETF saw significant redemptions this week, a trend that may indicate declining demand for the precious metal.
In the current scenario, central banks are projected to continue buying gold for the rest of the year, which would sustain gold prices even as investor demand declines. For the first time in three months, central banks became net buyers of gold in June. Central banks' recent shift to net buying of gold shows that governments continue to value holding the precious metal in their foreign reserves. Because of this pattern, Sugandha predicted that future large declines in gold prices would be unlikely.
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