By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
As markets assess rising treasury yields, dollar strength, the potential lag effect of an unprecedented cumulative rate-hike cycle, and increased geopolitical risk, gold has struggled to find direction in recent weeks and is maintaining firm base around Rs 59000.
The dollar experienced its biggest percentage drop in a single day since February on Friday as a result of the June jobs report from the United States being weaker than forecast. According to Labor Department data released on Friday, U.S. employers added 209,000 jobs in June, which was below economists’ expectations for the first time in 16 months.
This indicates that the FED’s effort to combat inflation with higher interest rates is making progress. The job market is cooling as there are now fewer than in the previous two and a half years. This will enable the FED to moderate its hawkish stance and provide some support for the price of gold.
As everyone is aware, the FED raised rates from their pre-pandemic level of 0.25% to a high of 5.5%. Despite the central bank’s decision to halt its rate hike cycle last month, there is a strong possibility that it will hike rates when it meets on July 26 for its subsequent rate review.
All eyes are now on the inflation reading for the upcoming week, which, if subdued, could increase risk appetite. A sustainable daily close above the Rs 59000 will turn gold bullish for the short term, with Rs 60000 as the immediate upside target. A sustainable daily close below the Rs 58000 range will extend gold’s correction, pushing it towards the Rs 57000.
Disclaimer: This report contains the opinion of the author, which is not to be construed as investment advice. The author, Directors, and other employees of Augmont Enterprise Private Ltd. and its affiliates cannot be held responsible for the accuracy of the information presented herein or for the results of the positions taken based on the opinions expressed above. The above-mentioned opinions are based on information, which is believed to be accurate, and no assurance can be given for the accuracy of the information. The author, directors and other employees and any affiliates of Augmont Enterprise Private Ltd cannot be held responsible for any losses in trading. In no event should the content of this research report be construed as an express or implied promise, guarantee or implication by or from Augmont Enterprise Private Ltd. that the reader or client will profit or the losses can or will be limited in any manner whatsoever. Past results are no indications of future performance. Information provided in this report is intended solely for informative purposes and is obtained from sources believed to be reliable. The information contained in this report is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. We do not offer any sort of portfolio advisory, portfolio management or investment advisory services. The reports are only for information purposes and are not to be construed as investment advice.