Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities
The gold and silver prices are on the way for a 2nd consecutive weekly loss.
Prices initially moved up as the dollar fell after a slower-than-expected rise in U.S. inflation led to uncertainty over the U.S. Federal Reserve's timeline to taper monetary stimulus.
The U.S. core Consumer Price Index edged up 0.1% in August, missing expectations of 0.3%. That was the smallest gain since February and followed a 0.3% rise in July.
The inflation data had reinforced the view that the Fed may go slow on unwinding economic support measures and keep interest rates low.
However, after the initial rise, prices were hit by a wave of technical selling, stronger-than-expected N.Y. Fed's manufacturing report for September and overall improved risk sentiment and weighed on bullion.
Additionally, the U.S Dollar and the benchmark bond yields recovered this week supported by upbeat retail sales data.
U.S. retail sales unexpectedly increased in August by 0.7%.
Bullion traders also ignored slightly weak initial unemployment claims which rose to 332,000 last week from a pandemic low of 312,000 a week earlier, the Labour Department reported.
Looking ahead, prices could continue to remain weaker over the next few sessions or atleast till clarity emerges from the Fed meeting next week.
The Fed meeting is on 21 and 22, and unless there is a Fed surprise or some geopolitical event gold's path is unlikely to change going into the FOMC meeting next week.
Weak inflation data has recast doubts over the Federal Reserve's taper timeline, but better than expected retail sales has reinforced ideas again whether the Fed should start the tapering of stimulus.
While we believe that the tapering announcement is unlikely until the November FOMC meeting, the September meeting will introduce the staff forecasts, or 'dots plots' for 2024. A poll suggests that the 2024 dots could mirror 2023's two rate hikes.
Anything more hawkish than 2 rate hikes will be negative for prices.
So, for now, heading into the next week, we could continue to witness some more correction in prices.
Apart from the FOMC meeting, the important macroeconomic data releases next week are Building Permits, Housing starts, Existing and New Home sales numbers from the U.S.
Technically, LBMA Gold support is at $1,750 and close below could pull prices to $1,725 levels. First resistance is at $1,775, then $1,1790, followed by $1,810. Range for the week will be $1725-1810.
MCX Gold April support is at 45875 and a close below could pull prices to 45690 and then to 45000. Resistance is at 46400 levels and only a sustained close above could push prices to 46600. Range for the week will be 45000-46600.
On the silver side of things, on the charts LBMA Silver below $24.80 level could see sideways to marginal downside momentum up to $22.10-$19.15 levels. Resistance is at $23.96-$24.80 levels.
Domestically, MCX Silver December below 63500 level could see 60000-58300 levels. Resistance is at 63700-65500 levels.
Disclaimer: The recommendations, if any, made herein are expression of views and/or opinions and should not be deemed or construed to be neither advice for the purpose of purchase or sale of any security, derivatives or any other security through RSL nor any solicitation or offering of any investment /trading opportunity on behalf of the issuer(s) of the respective security(ies) referred to herein. These information / opinions / views are not meant to serve as a professional investment guide for the readers. No action is solicited based upon the information provided herein. Recipients should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice and arrive at an informed trading/investment decision before executing any trades or making any investments. While due care has been taken to ensure that the disclosures and opinions given are fair and reasonable, none of the directors, employees, affiliates or representatives of RSL shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way whatsoever from the information / opinions / views contained herein.