By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
Throughout the previous week, market participants eagerly anticipated Federal Reserve Chair
Jerome Powell’s speech at the Jackson Hole Symposium. He reiterated the Fed’s willingness
to raise rates further if deemed necessary, but his remarks offered little new information.
Powell also affirmed the attention paid by the central bank to indications that the economy is not cooling as predicted. The FED will proceed cautiously in determining whether to tighten policy even more or to maintain the current rate while awaiting more data.Powell stated that a period of below-trend economic growth would be needed to get inflation back on target. As a result, for the foreseeable future, the stance of monetary policy must remain restrictive. If necessary, the FOMC is prepared to increase rates further.
However, the FOMC is currently dealing with several uncertainties. As a result, Fed policymakers must be agile. In other words, for the foreseeable future, the FOMC will be dependent on data. I think the FOMC will have a tough time raising rates at its meeting on September 20. I predict the Committee will remain on hold at upcoming meetings, but we recognise the possibility of further tightening if inflation and/or economic growth do not
moderate to below-trend rates.
Over the past week, markets have been taunted by shifting Fed expectations, and investors are likely to experience more pain in the coming days as important payrolls and inflation numbers are due. Given the warning signs that the US economy is rapidly slowing down, the August jobs report and PCE inflation readings will be closely watched.
Gold prices are consolidating in the range of Rs 58300 to Rs 59600 for the past few days, waiting for a positive trigger. Silver hasformed a base around Rs 70000 and is heading towards Rs 75000 in the short term. I think, the negatives are already discounted in the prices, so the downside will be limited. We are likely to good upside in the coming days, so buy-on dips should be a strategy used.
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