By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all

The main event that the market was waiting for last week was the US Jobs report. According
to the Labor Department report, the unemployment rate increased from 3.5 to 3.8 % in July,
and average hourly earnings increased from a year earlier by 4.3% in August. Last month,
employers added 187,000 more workers to their payrolls than they did in July. If we receive
additional encouraging inflation news in September and October, the Fed is likely finished
and the rate hikes have ended. This report raises the likelihood of a Fed rate pause in
September.

To combat 40-year high inflation, the Fed aggressively increased short-term borrowing costs
beginning in March 2022. Most recently, in July, it increased its target range for the
benchmark rate to 5.25% – 5.50%. According to the Fed's preferred inflation measure,
inflation has decreased from its peak of 7% last summer to 3% last month, but policymakers
still believe it is too high and have been waiting for the labour market to soften a bit to
maintain downward pressure on prices. Currently, traders expect the Fed to remain on hold
through April 2024, with rate cuts beginning in May.

The price of gold increased for a second week in a row as a softening US labour market
attracted dovish Fed wagers. Once $1950 is confirmed as support, gold may start to move
higher. However, the Dollar Index has climbed back above 104 levels, which is a negative
trigger for precious metals prices. As the Dollar Index heads higher towards $105 and above
levels, we see gold maintaining a cap of Rs 59600 this week. Gold prices are expected to
trade in the range of Rs 58300 and Rs 59600 this week. While the Silver range is expected to
be Rs 73000 to Rs 75000.

 

 

 

 

 

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