Gold price prediction today: Gold rates are expected to rise with the US Federal Reserve Chairman Jerome Powell signalling rate cuts. The Donald Trump administration’s 50% tariffs on India, will also need to be closely monitored. Praveen Singh, Senior Fundamental Research Analyst- Currencies and Commodities at Mirae Asset Sharekhan shares his views on gold price outlook and what levels investors should watch out for:Gold Performance:
- The Fed Chair Powell’s dovish flip in his much-awaited speech at Jackson Hole Symposium on August 22 as he shifted his focus from inflation to the US job market, boosted odds of a September rate cut. Consequently, gold staged a strong U-turn recovery on Friday to close 1% higher at $3,372. The metal posted a gain of 1.1% in the week ending August 22.
- At the time of writing this article on August 25, spot gold was changing hands at $3,374, up by $2 for the day, while the MCX October gold contract at Rs 100,665 was up 0.28%.
Powell’s speech at Jackson Hole Symposium:
- Powell, in his much-awaited speech on ‘economic policy outlook and Fed’s framework review’ at the Wyoming Conference said that the shifting risk situation may warrant downward adjustment in rates as he noted that the labor market is in a curious kind of balance resulting from a marked slowdown in both the supply of and demand for workers. He cited huge downward revision in two-month data in July nonfarm payroll report. He added that tariff impacts being visible now and likely to be short-lived, downside risks to employment are rising and can materialize quickly in the form of sharply higher layoffs and rising unemployment.
Geopolitics watch:
- US-Venezuela: The US has deployed three warships, carrying 4,000 sailors and Marines, to the southern Caribbean to combat drug cartels in the region. However, the US action has alarmed the socialist Government of Venezuela’s Maduro as earlier this month Trump’s attorney general doubled the bounty on Maduro’s head to $50 million. Maduro, in retaliation, has announced the deployment of 4.5 million militiamen throughout the national territory and has called on China as pressure mounts.
- Israel-Yemen: The Israeli military bombed the Yemeni capital Sanaa on Sunday in attacks that targeted an oil facility, a presidential palace, and a power plant in Sanaa. Israel targeted Iran-backed Houthis in its attacks.
Fed Watch:
- On August 22, the Justice department urged the Fed Chair Powell to remove the Fed Governor Lisa Cook alleging her involvement in a mortgage fraud, though only the president has the power to remove a Fed Governor. Reportedly, Trump would prefer to see Cook resign or be fired by Powell.
Trade and tariffs:
- President Donald Trump said his administration has begun a “tariff investigation” into furniture imports as they plan to levy duties on such goods in the next 50 days, though he did not specify a potential rate he would charge.
- US tariff rates of 50% on India become effective from Wednesday.
- Swiss Post will follow other countries in temporarily halting the delivery of goods to the US as the Trump administration eliminated a tariff loophole for so-called “de minimis” merchandise. Such packages, with a retail value of no more than $800, will cease to be exempted from Aug. 29, according to a White House fact sheet.
Data roundup:
- US New home sales (July) came in at 652K Vs the forecast of 630K, which is somewhat positive for the US Dollar.
- The German IFO Business Climate Index rose from 88.60 in July to 89 in August.
Dollar Index and yields:
- The US Dollar Index and yields plunged on the Fed Chair Powell’s speech on Friday. The Dollar Index slumped 0.90% to 97.72. Ten-year US yields fell 1.71% to 4.26% on August 22, while 2-year yields slumped 2.74% to 3.69%. However, Dollar and yields recovered some of the lost ground on Monday. The US Dollar Index, at the time of writing this report, was hovering at 98.11, up around 0.40% for the day, as the US yields rose. Two-year and ten-year US yields at 3.73% and 4.28% respectively were up by 3 bps each.
Gold ETF:
- As of August 22, total known global gold ETFs stood at 92.366 MOz, near a 2-year high and up over 11% YTD.
Upcoming data:
- Major US data on the cards this week include, durable goods orders (August 26), Conference Board Consumer Confidence (August 26), Q2 GDP secondary reading (August 28), PCE Price Index (August 29) and University of Michigan sentiments and inflation expectations (August 29).
- Key Eurozone data include retail sales (August 29); Eurozone’s consumer confidence (August 28); and France GDP and payrolls (August 29).
Gold Price Outlook:
- The Fed Chair Powell’s focus shifting from inflation to jobs has paved the way to a September rate cut, which is a positive development for gold – a non-yielding asset. In addition, Powell’s concerns about rising risks for the US job market and the economy also support the yellow metal. Investors expect two/three rate cuts in the remaining part of the year.
- August’s payroll and CPI reports will be crucial as investors will parse these reports for any hitches to the Fed’s possible rate cut in September.
- Gold needs to take out strong resistance at $3,410 to target the next resistance at $3,450. Support is at $3346 (Rs 99,800)/$3319 (Rs 98,900).
The outlook remains constructive; however, for domestic buyers, US tariff news flow concerning 50% tariffs on India, which includes 25% secondary tariffs, needs to be closely monitored as the August 27 deadline approaches. (Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)