Precious Metals Trade Steady Ahead of Key Fed Decision
Gold and silver prices remained relatively stable on Wednesday, with gold opening at Rs 59,222 per 10 grams and silver at Rs 72,284 per kg on the Multi Commodity Exchange (MCX). The day’s trading saw gold touch an intraday low of Rs 59,181, while silver reached an intraday low of Rs 72,170 on the MCX. Internationally, gold hovered around $1,931.85 per troy ounce, while silver was at approximately $23.20 per troy ounce.
Expert Opinions on Gold’s Outlook
Anuj Gupta, Head of Commodity and Currency at HDFC Securities, noted that gold prices had closed slightly higher the previous day, up by 0.04 percent, ending at Rs 59,283. He mentioned that the market was eagerly awaiting a decision from the Federal Open Market Committee (FOMC) and the possibility of steady interest rates. Gupta observed a positive trend in gold ETF investments in India, which could bode well for the precious metal.
Gupta added, “Gold’s latest challenge came as the Dollar Index hit a one-week high to reclaim the 105 berths. In the international market, gold is trading at $1931 level. For trading, gold may trade between $1920 to $1940 levels and on MCX, it may trade between 58800 to 59300 levels. It may test $1940 to $1945 levels.”
Impact of US Yields and Fed’s Decisions
Weak US housing starts data was offset by stronger US yields, leading to a minor $1 loss in spot gold prices, closing at $1,931.94. Ten-year US yields reached near 2007 highs, with five-year yields surging to levels not seen since 2007. Two-year US yields stood at 4.092 percent, up 0.72 percent, while ten-year US yields gained 1.46 percent to reach 4.36 percent.
Praveen Singh, Associate VP, Fundamental Currencies and Commodities at Sharekhan by BNP Paribas, emphasized that a retreat in yields combined with a dovish interpretation of the Fed’s decisions and forecasts could have a positive impact on gold prices.
Market Expectations and Economic Data Points
Market participants are not anticipating a hike in interest rates this week, especially after 11 previous hikes that added 5.25 percentage points to a base rate of just 0.25 percent in February 2022. Recent comments from Fed policymakers indicate ongoing concerns about inflation, but their actions will align with economic data points.
Janet Yellen, US Treasury Secretary, emphasized the need for slower economic growth to address inflation concerns. She mentioned that the economy was operating at full employment, even as US building permits increased while homebuilding plunged to a more than three-year low in August.
Analyst Recommendations for Gold and Silver
Amit Khare, Associate Vice President at GCL Broking, suggested, “Bullions daily charts are looking good and making a bottom, trading near the demand zone. Momentum Indicator RSI also indicates the same. So traders are advised to make fresh buy positions in Gold and Silver near the given support level one with the stop loss of support level two and book near the given resistance levels: Gold October Support 59080/58900 and Resistance 59300/59500. Silver December Support 72000/71400 and Resistance 72700/73100.”
As the market holds its breath for the impending Fed decision and watches key economic indicators, gold and silver remain steady, with potential movements hinging on the outcome of this critical event.