By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
Due to geopolitical concerns, the price of gold has continued to rise exponentially, reaching as high as $2700 this week. However, on Friday, prices began to decline again, as stronger-than-expected US employment data suggested that the labour market is still robust and that the Federal Reserve will probably soften policy by 25 basis points.
US nonfarm payrolls rose by 254K in September, above the revised August number of 159K and the projected 140K. Contrary to expectations, the unemployment rate dropped from 4.2% to 4.1%. The market has ignored the Fed’s 50 basis point decrease. The data from the CME Fed Watch Tool indicates that there is a 95% likelihood of a 25 bps cut and a 5% chance of rates remaining steady. The expectations for monetary policy have changed, and as a result, the U.S. dollar index has risen beyond 102 points and to a seven-week high.
However, given worries over a worsening of the Middle East war, gold’s downside may be constrained by support from safe-haven flows. Given Iran’s Tuesday night barrage, it is widely anticipated that Israel will strike again quickly. Iran fired almost 200 ballistic missiles, in retaliation for the murder of Iran-supported Hezbollah leader Hassan Nasrallah. Gold’s appeal as a portfolio asset for investors is maintained by the general downward trend in interest rates throughout the world, which also supports the yellow metal.
Gold Weekly Chart
Gold prices continue to sustain above $2650 (~Rs 75500) with the next upside target of $2700 (~Rs 76700) and $2750 (~Rs 78000) while downside support lies at $2630 (~ Rs 74600).
Silver Weekly Chart
Silver prices are trading strong sustaining above $32 (~Rs 92000), if prices sustain above $32.5 (~Rs 94000), the next target is $35 (~Rs 101,000).
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