Gold prices are showing strength as global events, economic data, and central bank actions play a big role in shaping their direction. Let’s break down the latest updates.
Recent Gold Performance
- Gold prices bounced back last week after US Federal Reserve Chair Jerome Powell hinted at rate cuts in his speech at the Jackson Hole Symposium.
- Spot gold closed 1% higher on Friday at $3,372, with a weekly gain of 1.1%.
- On August 25, spot gold was trading at $3,374, while MCX October gold stood at ₹1,00,665, up 0.28%.
Why Did Gold Rise?
Powell’s speech shifted focus from inflation to the job market, signaling possible interest rate cuts in September.
- He said US employment risks are rising, pointing to recent job data revisions and a slowdown in both job supply and demand.
- Lower interest rates usually benefit gold because it is a non-yielding asset.
Global Geopolitical Tensions
- US-Venezuela: The US deployed warships near Venezuela to counter drug cartels, angering President Maduro, who mobilized 4.5 million militia and sought support from China.
- Israel-Yemen: Israel carried out airstrikes in Yemen targeting Houthis’ oil facilities and infrastructure.
These rising geopolitical tensions typically support gold demand as a safe-haven asset.
US Tariffs and Trade Moves
- The Trump administration is imposing 50% tariffs on Indian goods starting August 27, with an additional 25% possible.
- The US also plans tariffs on imported furniture.
- Swiss Post and other couriers will stop deliveries of low-value goods (under $800) to the US due to new rules.
This trade uncertainty could affect India’s domestic gold market.
Dollar & Bond Market
- After Powell’s dovish speech, the US Dollar Index and bond yields fell sharply.
- However, they recovered slightly on Monday, with the Dollar Index at 98.11 and 10-year yields at 4.28%.
- A weaker dollar usually helps gold prices move higher.
Gold ETFs
Global gold ETFs are near a two-year high, showing strong investor demand. They are up 11% this year.
Key Data to Watch This Week
- US Data: Durable goods orders, consumer confidence (Aug 26), GDP update (Aug 28), PCE inflation (Aug 29), and Michigan consumer sentiment (Aug 29).
- Europe Data: Consumer confidence, retail sales, and France GDP/payrolls (Aug 28–29).
Gold Price Outlook
- Powell’s shift in focus has increased expectations of 2–3 rate cuts this year, boosting gold’s long-term outlook.
- Key resistance levels: $3,410 and $3,450.
- Key support levels: $3,346 ($99,800) and $3,319 ($98,900).
Summary:
Gold’s outlook remains positive thanks to Fed rate cut expectations, geopolitical tensions, and strong ETF inflows. However, Indian buyers must closely watch the impact of US tariffs on India, which could affect domestic gold prices in the near term.
