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Gold prices remained trapped in a range this week, wherein there was a divergence in domestic and international gold prices. The precious metal witnessed a decline in the international markets, while it gained significantly in the domestic markets amid rupee depreciation towards record lows and a surprise move by the government to raise import duty on gold by 5%. In the domestic market, the MCX gold rate surged 2.56% past week whereas the spot gold price corrected around 0.88% in this period. US GDP data, fear of slowdown, and inflation remained dominant in yellow metal movement throughout the week gone by.

Looking ahead, the gold price outlook is shaky in the short term as the tightening of global financial conditions is restricting the upside in the precious metal while looming recession risks are propelling safe-haven demand for gold on the other hand. So, gold investors are advised to remain vigilant about the major triggers that are expected to dominate the yellow metal price movement next week.

Here we list out the top 5 triggers that may dictate the gold price in the week ahead:

1] Dollar index: "Gold prices will react to a lot of variables during the week ahead. The first and the foremost trigger will be the movement of the dollar index. The broad-based strength in the US dollar has been weighing on the dollar-denominated gold. After the ascent seen in DX last week, wherein it is holding in the vicinity of two-decade highs, it remains to be seen whether the greenback can take out the recent highs and forge ahead. The price setup does indicate some resistance at the 105.80 mark, where any pressure in the dollar index would favor strength in the safe-haven precious metal," said Sugandha Sachdeva, Vice President — Commodity & Currency Research at Religare Broking Ltd.

2] US Fed meeting: "Next week’s calendar features the minutes of the Fed’s June meeting that will provide further cues about the monetary policy path of the US Fed. The Fed Chair in his recent hawkish remarks at the ECB forum has already maintained that the Fed remains focused on getting inflation under control, implying an aggressive stance of a rate hike at the July Meeting too," said Sugandha Sachdeva.

3] Macroeconomic US data: "US Non-farm payrolls data, and wage inflation data for June would provide insights into the labor market in the US and steer gold prices. Non-farm payrolls are expected to rise by 250,000 as against a job addition of 390,000 jobs in May. Average hourly earnings are expected to witness a rise of 5.2% in line with the May print. Any negative surprise in the June jobs report could favor bullish momentum in gold," said Sugandha Sachdeva of Religare Brokerage Ltd.

4] Rupee vs dollar: "Higher inflation and higher current account deficit, dollar demand was negative for the rupee. Further weakness in Indian National Rupee (INR) may lead to price appreciation in the yellow metal," said Anuj Gupta, Vice President — Research at IIFL Securities.

5] Crude oil price: "Crude oil is directly connected to dollar outflow and hence any further rise in crude oil is expected to put pressure on Indian rupee at the Forex market. So, one needs to keep an eye on crude and other commodity prices. Any further escalation in oil price is expected to trigger northward swing in gold prices," said Anuj Gupta of IIFL Securities.

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

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