Whalesbook
Gold prices are expected to face pressure this week driven by global economic factors, including shifting US Federal Reserve rate cut expectations and weaker US economic data. Subdued demand in Asia, particularly India, contributes to the outlook. Analysts highlight ₹1,22,000 as a crucial support level domestically.
Gold prices are anticipated to be under pressure this week due to various global factors, according to Maneesh Sharma, AVP - Commodities & Currencies at Anand Rathi Shares and Stock Brokers. Shifting expectations for a December Federal Reserve rate cut and a series of weak US economic indicators, such as job losses and falling consumer sentiment, have shaped market sentiment. While initial data points supported precious metals, the end of a prolonged government shutdown reduced safe-haven demand, and traders significantly scaled back the probability of a December rate cut. Federal Reserve officials have adopted a more cautious stance amid inflation risks, further contributing to the pullback.
Physical demand across Asia remains subdued. Indian dealers are offering steep discounts as market volatility deters buyers, while Chinese demand has softened due to regulatory changes. A firmer dollar index and continued ETF outflows are also expected to weigh on prices. The International Monetary Fund (IMF) has lowered its global growth forecast through 2026. Markets are closely watching upcoming economic indicators, particularly nonfarm payrolls, to gauge the Federal Reserve's next move.
Key triggers for gold and silver prices this week include President Trump's stance on tariffs, the Federal Reserve's views on interest rates, and economic data releases post-shutdown. Gold has fallen towards recent lows of $4050 from $4200. Weak data could offer support, but declining rate cut expectations and lower tariff dialogue might keep prices under pressure, dragging them towards immediate support of $4000-$3920.
On the domestic Indian front, ₹1,22,000 is identified as an important support level. A break below this could see prices drag towards ₹1,19,500-₹1,20,000. On the higher side, ₹1,25,000 serves as a significant resistance, and buying might resume above these levels.
Impact
This news is highly relevant for Indian investors who hold gold as part of their portfolio for hedging or diversification. Fluctuations in gold prices directly impact the purchasing power of Indian consumers for jewelry and investments, and influence the broader commodity market. Rating: 7/10.
Difficult Terms:
Federal Reserve: The central banking system of the United States, responsible for monetary policy.
Bullion: Gold or silver in bulk form, usually as bars or ingots, often considered a form of investment.
Consumer Sentiment: A measure of the optimism or pessimism of consumers regarding the economy and their personal financial situation.
ETF (Exchange Traded Fund): A type of investment fund that holds assets like stocks, commodities, or bonds and trades on stock exchanges, similar to individual stocks.
IMF (International Monetary Fund): An international organization that works to foster global monetary cooperation, secure financial stability, and facilitate international trade.
Tariffs: Taxes imposed by a government on imported goods or services, often used as a trade policy tool.
