Gold and silver prices commenced the day on the Multi Commodity Exchange (MCX) with gold opening at Rs 58,550 per 10 grams and briefly touching an intraday low of Rs 58,523. On the international stage, gold prices hovered around $1,922.85 per troy ounce. Meanwhile, silver initiated trading at Rs 71,750 per kg and reached an intraday low of Rs 71,380 on the MCX, paralleled by an international market price of approximately $23.16 per troy ounce.
Anuj Gupta, Head of Commodity and Currency at HDFC Securities, remarked, “Gold prices saw a 0.52 percent correction yesterday, closing at 58626 due to a lack of fresh buying interest in the market. Furthermore, the anticipation of an interest rate hike by the FOMC is exerting pressure on gold. The market is eagerly awaiting US economic data and the FOMC’s decision on interest rates. Additionally, we observed some profit-taking in the dollar index from higher levels. Gold may trade between $1900 to $1920 levels, while on the MCX, it could fluctuate within the 58500 to 59300 range, displaying a mixed to downward trend overall.”
Spot gold surrendered support at $1915 as two-year US yields edged up by 0.50 percent, ultimately closing above 5 percent.
Praveen Singh, Associate VP, Fundamental Currencies and Commodities at Sharekhan by BNP Paribas, noted, “Spot gold concluded with a 0.42 percent loss at $1913.64. The US Dollar Index rebounded nearly 0.40 percent from its daily low to reach 104.92 before concluding almost unchanged at 104.54. The US Dollar Index regained strength due to risk aversion in broader markets and somewhat weaker-than-expected UK job data. Additionally, investors reevaluated Bank of Japan’s Governor Ueda’s remarks about ending its ultra-easy monetary policy, which weighed on the Japanese Yen.”
Gold dipped to a more than two-week low amid a rise in US yields, with investors positioning themselves for the forthcoming US inflation data.
Manav Modi, Analyst, Commodity and Currency at MOFSL, explained, “The dollar index exhibited a 0.1 percent decline against its peers, providing some support to gold, while US 10-year yields continue to hover around the 4.3 percent mark. US CPI data is scheduled for later in the day, with the headline number expected to report at 3.6 percent, up from the previous 3.2 percent data, while expectations for Core CPI are somewhat lower.”
Should the inflation data meet or exceed expectations, it may exert downward pressure on bullion prices. The market is currently pricing in a 93 percent probability of the Fed maintaining interest rates at the upcoming Sept. 19-20 policy meeting, but there is a 40 percent chance of a hike in November, as per the CME FedWatch tool.
Modi added, “Last week, Fed officials expressed concerns about inflation but also displayed caution regarding growth, offering mixed perspectives on interest rate expectations. The European Central Bank anticipates that inflation in the 20-nation euro zone will remain above 3 percent next year, further bolstering the case for a tenth consecutive interest rate increase on Thursday. In addition to US inflation, today’s focus will also include UK GDP data.”
Nonetheless, ten-year US yields dropped by 0.19 percent.
Amit Khare, Associate Vice President at GCL Broking, advised, “October Gold closed at 58626 (-0.49 percent) and December Silver closed at 71934 (-0.02 percent). Bullion daily charts appear to be forming a bottom and are trading near the demand zone. The Momentum Indicator RSI also indicates a similar trend. Traders are encouraged to establish fresh buy positions in Gold and Silver near the provided support level one, with a stop loss at support level two, and to take profits near the provided resistance levels: Gold October Support 58500/58300 and Resistance 58800/59000. Silver December Support 71500/70700 and Resistance 72300/73000.”
Moreover, total known global gold ETF holdings have fallen for the seventh consecutive day through September 11, suggesting a weak unofficial sector demand.