Due to the Fed’s aggressive posture and the impending release of U.S. inflation statistics, yellow metal may struggle

On the Multi-Commodity Exchange (MCX) in the morning, gold contracts were trading 0.2% down at Rs 50,427 for 10 grams while silver prices were up 0.3% at Rs 55,213 for a kg. Spot gold prices increased globally by 0.1% to $1,717.17 per ounce. At $1,728,70, U.S. gold futures were unchanged. A key U.S. inflation reading that could determine the size of the Federal Reserve’s next interest-rate hike was the focus of investors on September 12, as prices of gold edged up in international markets despite the dollar remaining close to recent lows.

Comex gold was trading slightly lower near $1,725 per troy ounce as resistance from the U.S. Fed’s and other central banks’ tightening monetary policy, ongoing ETF outflows, and worries about Chinese consumer demand offset support from a weaker dollar, China’s virus worries, and Europe’s energy crisis. Gold once again rallied back after taking support near $1,700 but may struggle with Fed’s continuing emphasis on rapid tightening.

After U.S. Treasury Secretary Janet Yellen stated that lower gas prices would likely result in a decline in the U.S. inflation reading for August, gold may gain some strength. She added that some of the tariffs on Chinese goods were being reviewed by the U.S. and might be reversed. These reasons caused the dollar to decline, which will cause gold prices to increase. The likelihood of weaker U.S. CPI statistics could increase demand for safe-haven assets.

“On September 12, gold prices remained stable, with spot prices at Comex trading at about $1,714 per ounce in the early trade. While traders and investors awaited the important U.S. CPI data to be released on September 13, a weaker dollar limited the downside in the yellow metal. With COMEX spot gold support at $1,700 and resistance at $1,730 per ounce, we anticipate gold prices to trade in a range of sideways to lower for the day. Support and resistance levels for October gold on the MCX are Rs. 50,200 and Rs. 50,800 per 10 grams,” said, Tapan Patel, Senior Analyst (Commodities), HDFC Securities

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