Daijiworld Media Network - Mumbai
Mumbai, Aug 23: Gold and silver prices are expected to maintain their upward momentum next week, although profit-booking at higher levels could moderate the rally as investors turn their attention to key US economic data and Federal Reserve signals.
Analysts said the US Core Personal Consumption Expenditures (PCE) inflation data and second-quarter GDP figures will be among the major triggers for bullion prices in the coming week. Investors will also closely monitor developments surrounding the West Asia situation, including the US-Iran peace efforts and any progress towards reopening the Strait of Hormuz.
“ In the coming trading session, we expect bias to remain positive, but some profit-booking cannot be ruled out,” Pranav Mer, Senior Vice President, EBG - Commodity & Currency Research, JM Financial Services Ltd, said.
Gold and silver have recorded strong gains in recent sessions, supported by renewed buying interest, softer US bond yields and improving liquidity conditions. Internationally, a weaker US dollar has also helped boost demand for dollar-denominated precious metals.
On the domestic market, gold futures for October delivery gained Rs 7,932, or 5.13 per cent, during the week to close at around Rs 1.62 lakh per 10 grams on the Multi Commodity Exchange of India (MCX). Silver futures for September delivery surged Rs 10,673, or 4.52 per cent, to settle at around Rs 2.46 lakh per kilogram.
Recent market data also showed MCX gold moving above the Rs 1.60-lakh-per-10-gram level, while silver crossed Rs 2.45 lakh per kilogram amid a broad rally in precious metals.
“Gold remained firmly positive this week, gaining more than 5 per cent to close near Rs 1.62 lakh per 10 grams on the MCX,” Jateen Trivedi, Vice President, Research Analyst - Commodity and Currency at LKP Securities, said.
In international markets, Comex gold futures for December delivery rose $243.3, or 5.5 per cent, during the week to close at $4,680.6 per ounce. Silver futures for September delivery climbed $4.42, or nearly 7 per cent, to finish at $69.53 per ounce in New York.
Mer said international spot gold closed above $4,620 per ounce after gaining more than 5 per cent over the week. The sharp mid-week movement was supported by liquidity measures announced by the US Treasury Department to increase its buyback of longer-dated bonds.
The Treasury move contributed to a decline in US bond yields and the dollar, creating a more favourable environment for non-yielding assets such as gold. Market reports have also attributed the recent bullion rally to safe-haven demand and changing expectations around US monetary policy.
Another major event for bullion traders will be the Jackson Hole Economic Policy Symposium, scheduled from August 27 to 29. Federal Reserve Chair Kevin Warsh is expected to deliver his first keynote address at the event, with investors watching closely for indications about the central bank's approach to inflation and interest rates.
The US Core PCE Price Index, the Federal Reserve's preferred measure of underlying inflation, along with the revised second-quarter GDP figures and durable goods orders, are scheduled to be released during the week. Investors are expected to assess the data for clues about the Fed's next policy moves.
Softer inflation or weaker economic indicators could strengthen expectations of a more accommodative Federal Reserve stance, potentially supporting gold and silver. On the other hand, stronger-than-expected growth or persistent inflation could put pressure on bullion by reducing expectations of easier monetary policy.
Developments in West Asia will remain another important factor. Any progress towards a US-Iran settlement or reopening of the Strait of Hormuz could influence safe-haven demand, oil prices, inflation expectations and the broader financial markets.
With gold and silver already posting substantial weekly gains, analysts expect the overall bias to remain positive but caution that elevated prices could trigger intermittent profit-booking and short-term volatility.