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

Precious metals are still consolidating and are not out of the woods (out of the bearish zone) yet. Gold has been in a tight range within the Rs 61800 to Rs 62250 region this week, struggling to find enough buyers. After the FED Governor’s hawkish comments last week, markets are pricing lower chances of an FED rate cut in the March FED meeting. According to the CME FedWatch Tool, markets are pricing in a nearly 50% chance that there will be a 25-basis points rate cut in March.

Next week, the FED policy meeting, UK GDP and US nonfarm payroll are the important events that markets will keep an eye on. The Federal Reserve’s January policy meeting will likely be the centrepiece of the coming week, as investors believe a dovish shift is on the horizon. For some years now, market speculation has focused on the timing and amount of the Fed’s rate decreases.

However, the Fed will not have the final say on the dollar’s future until the latest nonfarm payrolls report is out on Friday. Despite expectations that rising interest rates would lead to massive job losses, everything now appears to point to a soft landing in the labour market, which would very certainly translate into the same for the US economy. After unexpectedly heating up in December, the labour market is forecast to cool in January. Employment is expected.

However, the eurozone’s flash estimate of fourth-quarter GDP growth is due on Tuesday, which may corroborate what many people already suspect. The Eurozone GDP is predicted to drop by 0.1% in the last three months of 2023, after shrinking by a similar amount in the third quarter. This would place it in a technical recession, but the overall picture is of stagnation rather than a full-fledged slump.

Technical indicators suggest a neutral-to-bullish bias in Gold and Silver, with the RSI moving sideways over 50 and the MACD entering the positive range. Gold and silver may continue to be vulnerable to downside risks unless they close firmly above the bearish channel of Rs 62250 and Rs 72000, respectively.

 

 

 

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