Gold prices are likely to remain in a consolidation phase in the near term, but the overall bias will continue to stay positive amid heightened expectations of a US Federal Reserve rate cut in its September policy meeting, analysts said.
Photograph: Edgar Su/Reuters
Traders will closely track US macroeconomic data, such as Q2 GDP, PCE inflation, and speeches from Fed officials, which will provide more insights into the monetary policy stance of the Federal Reserve and the trajectory of the bullion sentiment, they added.
“Gold prices may continue to see some consolidation, but the bias is expected to remain positive.
“The US Federal Chair Jerome Powell’s comments have raised expectations of an interest rate cut at the September meeting,” said Pranav Mer, vice president, EBG – Commodity & Currency Research, JM Financial Services.
Investors will keep track of geopolitical and trade developments, he added.
“Markets will watch closely the Russia-Ukraine peace progress and the implementation of additional tariffs on India from August 27 over its Russian oil purchases,” Mer said.
Last week, the precious metal regained the psychological Rs 1 lakh level on the Multi Commodity Exchange, by rising Rs 956 or 1 per cent to Rs 1,00,391 per 10 grams.
The gains came on strong buying interest after Federal Reserve Chair Powell signalled a possible shift in monetary policy at the Jackson Hole symposium, hinting that the central bank may soon cut interest rates for the first time since December.
The upcoming US Fed’s FOMC meeting is set to happen on September 16-17.
Powell also said that Fed officials could still consider delaying a rate cut to later this year if the tariffs imposed by US President Donald Trump somehow manage to have a pronounced effect on domestic prices.
According to Prathamesh Mallya, DVP – Research, Non-Agri Commodities and Currencies, Angel One said gold prices had been correcting in recent weeks due to a lack of fresh triggers, but Powell’s statement provided a fresh boost.
“The chances of a September rate cut and a further cut later in the year are now significantly higher.
“This allowed for a sharp move in MCX gold as traders looked to benefit from cheaper prices after the dollar weakened,” Mallya said.
Mallya observed that uncertainty continues to linger in global markets.
“The Russia-Ukraine peace discussion is on the table, although there are many ifs and buts for an actual settlement of the conflict.
“The tariff situation also appears never-ending during Trump’s term.”
In the international market, the most traded Comex gold futures for December delivery rose 1.09 per cent on Saturday to settle at $3,418.50 per ounce, reflecting renewed optimism among investors after Powell’s remarks.
Manav Modi, analyst – Precious Metals, Motilal Oswal Financial Services, said gold started last week on a weak note as easing geopolitical tensions and shifting monetary policy expectations influenced sentiment.
“Some easing was sparked by news that US tariffs on Swiss gold were reversed after the White House clarified the reports were false, leading to a retreat in prices.
“Domestically, the rupee volatility and a stronger dollar capped gold’s upside initially, while softer Chinese inflation data dragged industrial metals lower,” Manav Modi said.
Analysts said the near-term outlook for gold depends on a combination of incoming US economic data, progress in Russia-Ukraine talks and clarity on trade tariffs.
While the metal may experience bouts of consolidation, the broader bias is expected to remain firm as expectations of monetary easing gain traction.
