Gold price prediction today: Gold rates are likely to trade with a positive bias though they have been stuck in a range for some time now.Praveen Singh, Senior Fundamental Research Analyst- Currencies and Commodities at Mirae Asset Sharekhan shares his views on gold price outlook and what levels investors should watch out for:Gold Performance:
- On August 1, a weak-looking gold staged a sharp U-turn reversal on an extremely weak US nonfarm payroll report. Gold rally gathered further pace on the US President Trump firing BLS Chief Erika McEntarfer in the wake of the US NFP report as he accused her of political bias. This unfortunate event is giving rise to concerns among investors over the Fed’s independence and data quality.
- As a result of a huge surge of 2.2% on Friday, the shiny metal ended the week ending August 0.7% higher. Gold extended its rally on Monday and rose to $3,385, tough healthy risk appetite in risk assets on the Fed rate cut expectations tempered the gains of the metal. At the time of writing this article, spot gold was changing hands at $3,372, up around 0.30% for the day, while the MCX October gold contract at Rs 101,161 was up by Rs 1.41% as extremely weak Indian Rupee further boosted MCX gold prices.
Data roundup:
- US data released on August 4 were mostly in line with the forecast as factory orders (June) contracted by 4.8% (forecast -4.8%) while durable goods orders (June final) fell 9.4% (forecast -9.3%).
- The US nonfarm payroll released on August 1 showed that US employers added 73K jobs Vs the forecast of 104K as unemployment rate edged higher from 4.12% to 4.25% despite decline in labour force participation rate. The worst part of the report was a huge downward revision of 258K jobs in the two-month payroll because of which 3-month average nonfarm payrolls change fell from 150K jobs to 35K jobs — far below 100K jobs required to maintain the unemployment rate stable.
Tariff developments:
- On Monday, the President Trump said that he will substantially hike India’s tariffs over Russian oil purchases. The announcement weighed heavily on the domestic currency, and it tumbled nearly 1% from its day’s high to fall to a fresh record high of Rs 88/USD in the NDF market.
- The Swiss government, in response to a steep tariff rate of 39% imposed by the US Administration, as Switzerland has a trade surplus of $50 billion, has come out with a proposal to dissuade the US Administration as Swiss State Secretariat for Economic Affairs also tries to find a way out with its US counterpart.
- The EU will delay planned US tariffs for six months to engage in trade talks.
US Dollar Index and yields:
- The US Dollar Index, at the time of writing the article, was hovering around 98.75, down 0.40% for the day. Ten-year US yields were steady at 4.22%, while 30-year yields eased by around 2 bps to 4.80%. Two-year US yields, that slumped 27 bps to 3.68% on Friday due to extremely weak non-farm payroll increasing the September rate cut odds to almost certainty, were up by 3 bps.
Upcoming data:
- Today’s US data include trade balance (June), S&P global US services and composite PMIs and the crucial ISM services Index (July).
- Investors will also monitor PMI services and composite data out of China, Japan, the UK and the European Union, too.
ETF holdings and COMEX Inventory:
- As of August 1, total known global gold ETF holdings stood at 91.686MOz — at two-year high. Holdings are up 10.64% YTD.
- COMEX gold inventory currently at 38.71 MOz are down nearly 14% from the record peak level of 45.07 Moz seen on April 4.
Gold Price Outlook:
- Nonfarm payroll disaster and the President Trump shooting the messenger as he fired the BLS chief on Friday have diminished the bearish pressure on the metal to a great extent. That the US President Donald Trump will have a chance to choose a replacement for Federal Reserve Governor Adriana Kugler following her resignation Friday may intensify the downside pressure on the US Dollar.
- Today’s US ISM services Index data will be crucial. A weak data will add to the upside momentum in the yellow metal. Correction in gold prices on healthy risk appetite and strong US ISM services could be used for buying the dips. Volatility in the Indian Rupee due to tariff news flow carries a huge exchange rate risk for the domestic gold prices.
- Overall, gold is still stuck in its nearly 11-week-old range of $3250-$3450. In ultra short-term, gold is expected to trade with a positive bias. Nonetheless, tariff news flow should be closely monitored. Support is at $3350 (Rs 100,500)/$3320 (Rs 99,500)/$3292 (Rs 98,700). Resistance is at $3400 (Rs 102,000) /$3450 (Rs 103,500).
- MCX levels are the INR/USD rate of Rs 87.90.
(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)