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Gold price outlook: 5 factors that may decide yellow metal's movement this week

Gold prices outlook: In a truncated week with holidays in the major global markets, China’s manufacturing data along with inflation figures from Europe’s major economies would be in focus, say experts.Premium
Gold prices outlook: In a truncated week with holidays in the major global markets, China’s manufacturing data along with inflation figures from Europe’s major economies would be in focus, say experts.

  • Gold price outlook: First and foremost, the direction of the dollar would be pivotal as a retreat in the dollar index would provide a fillip to the gold prices, believe experts

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Gold prices continued to gain traction as the precious metal logged second weekly gain after the recent price correction. The dollar index fell for the second week in a row and the benchmark 10-year note slipped to a fresh six-week low, both of which favored strength in the yellow metal. However, gains were capped by the US Fed's aggressive stance in its minutes of the May 2022 meeting. Additionally, a respite in global equities undermined the bullion’s appeal. So, it becomes important for a gold investor to remain vigilant about the important triggers that may impact gold price movement in short term.

Speaking on important factors that may impact gold price movement next week, Vipul Srivastava, Research Analyst — Metals and Energy Research at Religare Broking Ltd said, "Moving to the week ahead, some key factors would hold the spotlight. First and foremost, the direction of the dollar would be pivotal as a retreat in the dollar index would provide a fillip to the gold prices. In a truncated week with holidays in the major global markets, China’s manufacturing data along with inflation figures from Europe’s major economies would be in focus. On Friday, US non-farm payrolls and employment data would be a key highlight of the economic calendar, which would provide clues about the health of the world’s largest economy and could set the theme for bullion prices going forward."

Here we list out top 5 triggers that may dictate gold price movement next week:

1] Dollar index: "After climbing to 20 year high, dollar index has come down at around 101 that has helped gold price to clock rise in last two weeks. As speculations of slowdown in the US economy are high, the index is expected to move further downward, pushing gold price towards $1900 per ounce in spot market," said Anuj Gupta, Vice President — Research at IIFL Securities.

2] Chinese manufacturing data: After lockdown, whole world is looking at China as it is expected to share its manufacturing data this week. Any weakness in the data may trigger sell-off in global equities leading to rise in demand for 'investors haven.' So, gold investors are advised to remain vigilant about the Chinese manufacturing data.

3] European Central Bank: Following US Fed's hawkish stance on interest rate hike, speculations are high that European Central Bank may enhance interest rate. If this happens, it will be a big dent to global equity markets as FIIs may choose to fish out money from the equities and invest in euro. In that case euro and gold may edge higher.

4] Rupee vs dollar: "After hitting life-time low, Indian National Rupee (INR) gained some lost ground last week against the US Dollar (USD). Further rise in gold price may put some breaks on the gold rally. However, in case of weakness in INR, gold price may get accelerated as global triggers are conducive for gold rush," said Anuj Gupta of IIFL Securities.

5] US non-farm payrolls and employment data: This release is expected on Friday next week. In case of disappointing numbers, demand for precious metal is expected to go northward as speculations about slowdown in the US economy is already doing the rounds.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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