Monday’s opening price for gold on the Multi Commodity Exchange (MCX) was Rs 59,570 per 10 grammes, and the price fell as low as Rs 59,516 during the day. Prices on the world market were roughly $1,938.55 per troy ounce. On the MCX, silver opened at Rs 75,099 per kg and fell as low as Rs 75,075 during the course of the day. On the international market, the cost per troy ounce was roughly $24.23.
“Gold price firmed, buoyed by hopes that the Federal Reserve would take a break from interest rate hikes this year after U.S. data showed a jump in the unemployment rate, but bullion held below last session’s one-month highs on a strong dollar and Yields,” said Manav Modi, Analyst, Commodity and Currency, MOFSL.
The U.S. dollar was trading near its most recent three-month highs, above the 104 mark, and U.S. yields are still trading above the 4% mark, supporting expectations of future rate increases.
“Last week, the U.S. Core PCE price index was largely in line with forecasts,” Modi said. The number of jobs added in the US increased in August, but the unemployment rate increased to 3.8%, and wage growth slowed. The U.S. manufacturing PMI dropped for a 10th straight month in August and was reported below the 50 threshold, which immediately led to a buying impulse in safe-haven assets, but the gains were limited.
Last week, premiums on physical gold in China decreased from previous highs as safe-haven buying slowed in the assumption that stimulus would improve the economy of the world’s largest buyer of the metal. In light of these data points, the odds of a Fed meeting postponement in September have risen to more than 90%. Due to today’s back-to-work holiday, U.S. markets may experience slightly lower volatility.
“MCX Gold and Silver gave mixed closing yesterday, October Gold closed at 59395(0.04%), and December Silver closed at 75089(-0.78%),” according to Amit Khare, Associate Vice President at GCL Broking. The Momentum Indicator RSI and the daily charts for bullions both indicate considerable profit taking. Therefore, traders are advised to close out existing long positions in Gold and Silver and open new ones close to the indicated resistance level one with a stop loss at the indicated resistance level two. Gold October Support 59200/59000 and Resistance 59500/59700. Support for Silver in December is 74500/74000, and resistance is 75600/76200.
Although the headline job figure of 187k was higher than the consensus of 170k jobs, July data was revised lower by 30k, extending the streak of downward revision in monthly job reports — a continuous trend observed this year. As a result, the U.S. nonfarm payroll report for August was weaker than expected. The labour force participation rate increased from 62.60% in July to 62.80% in August, which is the highest level since February 2020. This helped to raise the unemployment rate from 3.50% in July to 3.80% in August. Increased labour force participation will partially relieve pay pressure and partially lessen wage inflationary pressure.
August’s average hourly earnings decreased from 0.40% in July to 0.20%, falling short of forecasts for a 0.30% increase. On a year-over-year basis, average hourly wages were reported at 4.30%, which was in line with expectations. 110k jobs were lost in the two-month payroll adjustment. A bright spot in the employment report was the hours worked statistics, as the average weekly hours for all employees, 34.40, above the forecast of 34.30 hours, continued Singh.
The ISM manufacturing PMI data for August improved to 47.60 from 46.40 in July, exceeding the estimate of 47 despite the fact that the ISM prices paid increased to 48.40 from 42.60 in July, raising inflationary fears.
The dismal U.S. jobs report initially caused a rally in U.S. treasuries, but the rally was unsuccessful due to theories that seasonality, Hollywood strikes, and the bankruptcy of the trucking business Yellow Corp. may have artificially inflated the headline figure, which might be reversed in subsequent job reports. The $120 billion in corporate bond issue that was scheduled for September as well as the ISM prices paid data added to the bonds’ burden, according to Singh.
Although the yellow metal gained over 1.37% on the week due to reduced yields in the week ending September 1, spot gold was almost flat Friday as the U.S. yields spiked, supporting the U.S. Dollar Index.
Another noteworthy news that is favourable for gold is that the Canadian GDP unexpectedly shrank by 0.20% versus the projection of 1.20% growth. China’s banks reduced mortgage rates elsewhere to boost the real estate market. August’s Caixin manufacturing PMI in China revealed an unexpected rise. European data that are disappointing fuel stagflation fears.
On August 31, the total known worldwide gold ETF holdings increased for the second straight day. In the near future, gold bulls can try to challenge the $1965 resistance. There is temporary resistance near $1955. At $1931/$1914, there is support. Overall, it is anticipated that dip buying would be a recommended option.