By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
Precious metals are on tenterhooks – waiting nervously for something to happen. Gold and
Silver prices are continuously facing selling pressure on dollar strength and rising US bond
yield. Dollar Index has risen almost 3% in the last month due to the following reasons:
• The U.S. economy has remained remarkably resilient, expanding at an annualised rate
of 2.4% in the second quarter of 2023 despite 525 basis points of Fed rate hikes since
March 2022.
• Inflation in the US grew less quickly than anticipated in July as rising rental costs were
offset by lower prices for used cars. While headline inflation accelerated modestly to
3.2% against the previous release of 3% but remained slightly below the consensus of
3.3%, core annual CPI softened to 4.7% from estimates and the prior release of 4.8%.
• The Fed’s decision to maintain its current monetary policy in September is supported
by a slight increase in US inflation. Less than 10% of traders predict that the US will
increase interest rates next month, according to the CME Group Fedwatch tool.
• US President Biden limits some new investments in sensitive technologies in China.
Investors are concerned that Beijing might respond negatively and a trade war could
heat up.
The bullion market is waiting for a positive trigger that could support the prices from falling further. But till then, for the next few days, Gold price should get support around $1900 (Rs58000) but needs to pass through more filters for a confident reversal. Prices need to sustain above $1965 (~ Rs 59600) to start a new uptrend. Otherwise, we could see more profitbooking towards $1900 (Rs 58000) in the short term. Silver has broken the support of $23 (Rs70000), and the down leg can continue towards $22 (~ Rs 68000).
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