Continuing last week’s positive momentum driven by the US Fed’s ‘mildly bullish’ stance on interest rate hikes, gold rose nearly 2.39 per cent in the past week. As expected, the US central bank hiked interest rates by 75 bps for the second consecutive month to counter scorching inflation. However, the US Federal Reserve acknowledged a moderation in economic activity, which assuaged concerns about the path to a faster rate hike and prompted ‘safe-haven’ buying in gold. Besides, the dollar index saw a decline for the second consecutive week, leading to a fall in gold prices. Weak US GDP data also supported the upside in gold prices.
However, gold investors are advised to be cautious about the chain of events happening next week as they expect the yellow metal to decide the price in the near future.
Here we list down the top 5 triggers for gold rate in the near term:
1]BOE meeting: “BoE has already raised interest rates five times since December 2021 and with inflation hitting a four-decade high, a half percentage point increase is one of the options on the table, as the central bank is looking to tackle inflation. Further, future guidance by BoE will be crucial in determining the move in pound as well as dollar index and will impact gold prices,” said Sugandha Sachdeva, Vice President – Commodity & Currency Research Religare Broking .
2]RBI MPC Meeting: “Market participants will also focus on the outcome of RBI’s monetary policy, which will impact the rupee-dollar exchange rate and will be crucial for the domestic gold price trend,” Sugandha Sachdeva said.
3]US Job Data: US non-farm payrolls and employment data will provide clues about the health of the jobs market in the US and guide the Fed’s monetary policy path forward.
“After the weak US GDP data, if the US job data also turns disappointing, the dollar index may take a sharp profit-booking and fall below the level of 105. As agricultural yields are also declining day by day Hence, gold is expected to emerge as investors. “Haven in such a situation,” said Anuj Gupta, vice-president of research at IIFL Securities.
4]OPEC meeting: “The meeting of OPEC and allies during the week and their production policy will also be taken into account as it will be very important to shape the trend of crude oil prices and provide clues about the inflation trajectory. Most members will have much surplus. The capacity is not there because it will be difficult for the group to increase production significantly,” said Sugandha Sachdeva of Religare Broking.
5]Manufacturing PMI July Number: Markets will closely analyze the Manufacturing PMI (July) data for China, the US and Europe, as well as the PPI data for Europe.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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