Gold prices opened on the Multi Commodity Exchange (MCX) on Thursday at Rs 58,800 per 10 grams and hit an intraday low of Rs 58,750. In the international market, prices hovered around $1,897.25 per troy ounce. Meanwhile, silver opened at Rs 73,849 per kg and hit an intraday low of Rs 73,660 on the MCX. The price hovered around $23.41 per troy ounce in the international market.
Spot gold closed with a gain of 0.91% at $1914.31 Wednesday. The metal rose on disappointing PMI data out of the UK, Euro-zone and the US. The services sector in the UK and the Eurozone contracted unexpectedly, which initially strengthened the US dollar. However, the US services PMI data, although still in expansion zone, trailed forecasts, which led to a sharp decline in the US yields.
The Dollar Index fell from the day's peak near 104 on improved risk appetite and a pullback in the US yields. The Euro-zone services PMI contracted for the first time since the end -2022, whereas the UK services PMI contracted for the first time in seven months.
Ten-year US yields closed with a loss of 3.14% at 3.196%, and two-year yields at 4.971% were down 1.93%.
Praveen Singh – Associate VP, Fundamental Currencies and Commodities, Sharekhan by BNP Paribas, said, “Risk appetite remains healthy ahead of the Federal Reserve's Chair Powell's speech at Jackson Hole symposium Friday. Today’s US data include durable goods orders and weekly jobless claims. In a supportive development for gold, Bureau of Labour Statistics has reported that the US job growth was less robust than initially reported as the number of workers on payrolls through March will be revised lower by at least 306k. The tally may rise further when the final revision is done in early 2024.”
Despite a rebound this week, gold prices are still near five-month lows, and it is anticipated that the yellow metal's recovery will be brief as long as U.S. rates continue to rise.
Prithviraj Kothari, MD CEO of RiddiSiddhi Bullions Limited, said, “Market attention had now been firmly fixed on a speech by Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium. Given that the labour market is robust and that inflation has remained sticky, Powell may signal a period of higher U.S. interest rates. Given that rising rates increase the opportunity cost of investing in the yellow metal, any indications of higher U.S. rates are likely to cause additional losses in the gold market.”
Amit Khare, Associate Vice President at GCL Broking, said, “October Gold closed at 58819(0.42%) and September Silver closed at 74004(2.87%), Bullions daily charts are looking attractive, We can see good upside movement in near future, Momentum Indicator RSI also indicating the same , So traders are advised to make fresh buy positions in Gold and Silver near given support level one with the stop loss of support level two and book near given resistance levels: Gold October Support 58600/58300 and Resistance 59000/59200. Silver September Support 73500/72700 and Resistance 75000/75500.”
The dollar witnessed a sharp pullback against Asian currencies, after softer-than-expected global economic data muddied the interest rate outlook and pushed down U.S. yields by more than 2%. U.S. business activity approached the stagnation point in August, with growth at its weakest since February, as demand for new business in the vast services sector contracted.
Manav Modi, Analyst, Commodity and Currency, MOFSL, said, “Gold prices hovered near two-week highs on Thursday, lifted by a retreat in the U.S. dollar and Treasury yields as investors waited to see what interest rate signals the U.S. Federal Reserve could send at its annual Jackson Hole meeting.”
Preliminary manufacturing and Services PMI from major economies were very disappointing increasing concerns regarding global growth.
Modi said, “Market participants have firmed up bets that the European Central Bank would pause hiking rates in September, as sharp contractions in business activity pointed to deepening economic pain. While, the interest rate on the most popular U.S. home loan last week shot to its highest since December 2000. The Federal Reserve is holding its annual symposium in Jackson Hole, Wyoming, from Aug. 24-26, with the focus on Chair Jerome Powell’s speech on Friday. Focus today will be on the US Core Durables goods orders and weekly jobless claims data. Comments from the BRICS summit and Jackson hole symposium will also important to watch.”