Gold Price Forecast: Volatility Expected Ahead of US Economic Data
Gold prices are anticipated to remain volatile in the upcoming week as investors prepare for a series of significant U.S. economic indicators. Key events include the jobs report, the release of Federal Reserve meeting minutes, and a speech by Fed Chair Jerome Powell. Analysts suggest that these developments will influence expectations regarding a potential interest rate cut in December, leading to heightened market fluctuations.
Market Reactions to Economic Indicators
The gold market has experienced notable fluctuations recently, with futures for December delivery on the Multi Commodity Exchange (MCX) rising by Rs 2,494, or 2.06%, over the past week. This increase was primarily driven by a weaker dollar, ongoing uncertainty surrounding the 43-day U.S. government shutdown, and an expansion in the Federal Reserve’s money supply. However, the market saw a sharp reversal on Friday, with gold prices dropping by Rs 3,190, or 2.52%, to close at Rs 1,23,561 per 10 grams as traders opted to book profits. Pranav Mer, Vice President of EBG – Commodity & Currency Research at JM Financial Services, noted that while volatility is expected to remain high, gold prices may find some support as investors closely monitor U.S. economic data releases for insights into the health of the American economy and potential shifts in the Fed’s rate outlook.
Global Trends and ETF Inflows
On the global stage, Comex gold initially rose by USD 84.4, or 2.10%, during the week but faced a significant decline of USD 100.3, or 2.39%, on Friday, settling at USD 4,094.2 an ounce. Riya Singh, a research analyst at Emkay Global Financial Services, highlighted that renewed inflows into exchange-traded funds (ETFs) and softer U.S. macroeconomic indicators provided earlier support for gold prices. In the last session alone, ETFs added 114,345 ounces, bringing year-to-date purchases to 14 million ounces, a remarkable 17% increase in holdings. Singh emphasized that weak jobs data, a fragile fiscal outlook, and a soft dollar have continued to attract safe-haven flows, suggesting that gold could test levels between USD 4,300 and USD 4,385 per ounce if the bullish momentum persists.
Impact of the U.S. Government Shutdown
The ongoing U.S. government shutdown has created a data blackout, adding to the uncertainty in the markets. Prathamesh Mallya, DVP of Research (Non-Agri Commodities & Currencies) at Angel One, stated that market participants are hopeful that upcoming data will indicate a slowing economy, which could provide the Federal Reserve with the necessary leeway to consider rate cuts in December. Mallya noted that a variety of factors will contribute to continued volatility in gold prices in the weeks ahead, as traders navigate the implications of the shutdown and its impact on economic indicators.
Silver’s Performance in the Market
In contrast to gold, silver has shown remarkable performance recently. MCX December futures for silver surged by 5.61%, or Rs 8,290, and rallied over 12% in the four sessions leading up to Thursday, largely due to its inclusion on the U.S. critical minerals list. However, silver also faced a correction on Friday, sliding by Rs 6,452, or 3.97%, to close at Rs 1,56,018 per kg. On the global front, Comex silver rose by USD 2.5, or 5.3%, for the week but ended Friday down by USD 2.4, or 4.67%, at USD 50.68 an ounce. Mer indicated that silver’s near-term momentum appears sideways, with resistance levels identified at Rs 1,70,500 per kg, suggesting a cautious outlook for the metal in the near future.
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