In the very short term, gold is expected to test strong resistance around $4160. (AI image)
Gold Price Prediction: Gold prices are rising again due to expectations of US Federal Reserve rate cut and China’s gold purchases. However, Praveen Singh, Senior Fundamental Research Analyst – Currencies and Commodities, Mirae Asset Sharekhan, advises buying the dips rather than chasing the rally. Analysts share their views on the gold price outlook and what levels investors should keep an eye on:Gold Performance:
- Although expectations of an end to the ongoing US shutdown soon have boosted risk appetite, spot gold extended Friday’s gains and rose sharply on Monday on expectations of a Fed rate cut, a weaker US dollar and China’s Central Bank adding gold reserves for the 12th consecutive month in October.
- Gold also rose on inflation concerns as President Donald Trump once again floated the idea of sending Americans rebate checks worth at least $2000 per person (except high-income earners) to make up for tariffs collected by his administration.
- At the time of writing, spot gold was trading at $4,096 with a massive daily gain of 2.34%, while
mcx gold The December contract was up 2.07% at Rs 123,707. - In the week ending November 7, spot gold prices closed at $4001 with a weekly loss of $1, which is the third consecutive weekly loss.
Shutdown likely to end in America:
- On November 9, the US Senate advanced a plan to end the longest US government shutdown to date in weeks. A faction of moderate Democrats defied their party’s leaders and voted to support an agreement to end the ongoing shutdown.
- As flight disruptions caused by heavy snowfall worsen, the ongoing shutdown could increase strain on the U.S. air-traffic system ahead of the busy Thanksgiving travel period as controllers may have to continue working without pay checks.
Fedspeak:
- Musallem, president of the Federal Reserve Bank of St. Louis, expects the U.S. economy to make a strong comeback early next year as rate cuts, fiscal support, deregulation and the government shutdown end. He urged Fed officials to remain cautious on additional rate cuts because he believes current Fed policy is close to a level where it will exert no pressure on inflation.
- In contrast, Federal Reserve Bank of San Francisco President Mary Daly warned against keeping interest rates high for too long due to a softening labor market and slowing wage growth.
US Dollar Index and Yields:
- At the time of writing, the US Dollar Index was up about 0.15% for the day at 99.72. The day’s low was 99.45.
- US ten-year yields at 4.11% were up nearly 1.50 bps, while 2-year yields at 3.59% were up nearly 3 bps.
US data roundup:
- The US employment report has not been published in November, making it the second month without a national employment report.
- Bloomberg estimates that depending on the US government reopening date, the September employment report may be published on November 19/November 26. Yet the report may not present a true picture due to uncertainty over the federal government’s employment data. Other reports will also be delayed.
- However the October CPI report may not be released.
- Data released in the week ending November 7 were largely mixed as US ISM manufacturing beat forecasts and contracted for the seventh consecutive month in October, while ISM services at 52.40 beat forecasts of 50.80 to rise at the fastest pace since February.
- The University of Michigan’s consumer sentiment fell from 53.60 in October to 50.30 in November, near a record-low and below levels seen during the 2008 global financial crisis and Covid.
- It should be noted that ADP data released last week showed that US companies added 42K jobs in October, indicating moderate stabilization in the US job market. The Challenger job cuts report showed that nearly 950,000 US jobs were cut through September this year, the most cuts since 2020.
Gold ETFs and COMEX Inventories:
- Total known global gold ETF holdings rose for two consecutive days to 97.24 MOZ as of November 7, although they declined for the third consecutive week. Nonetheless, the holdings are up 17.36% this year and hover around 3-year highs.
- China’s domestic gold ETF holdings increased by 79.015 tonnes in the January to September period, a huge increase compared to a gain of 29.927 tonnes during the same period last year.
- COMEX gold prices stood at 17.94Moz, the lowest level since April.
China’s Central Bank is buying gold for the 12th consecutive month:
- China’s official gold reserves stood at 74.09 MOz at the end of October, up from 74.06 MOz a month earlier, meaning the PBoC bought about a tonne of gold in October.
- Uzbekistan’s gold reserves reached $47.85 billion in October, a record high for the fourth consecutive month.
Gold consumption decreased in China:
- The country’s gold consumption fell 7.95% year-on-year to 682.73 tonnes in the January-September period, according to a statement from the China Gold Association.
Gold Price Outlook:
- The possible end of the US government shutdown has focused investors’ attention on Fed rate expectations in October as upcoming US data could see the economy decelerate.
- Gold is also benefiting due to increased buying by China and inflation concerns.
- However, stagnant US yields and the dollar may limit gains
- In the very short term, gold is expected to test strong resistance around $4160, successful breach of which will open the way to test resistance in the $4190-$4200 area.
- Buying on dips is preferred than chasing rallies.
- Support is at $4075/$4025/$3990.
Silver: rose sharply
- MCX Silver December contracts rose 4% for the day to 153,650.
- The metal may test resistance around Rs 158,500 as it has cleared strong resistance at $49.30 (Rs 150,000), which will now act as support.
- The next support comes at $48.50 (Rs 148,000).
- Buying dips is preferred rather than chasing the current uptrend.
(Disclaimer: The recommendations and views given by experts on the stock market, other asset classes or personal finance management are their own. These opinions do not represent the views of The Times of India)
