Gold Weekly Update

Gold’s performance during the last week was measurably attributed to the Israeli-Palestinian conflict that saw more escalation during the weekend. How long this effect will last depends on the wider reach the conflict may have on the global economy.  In such cases, given the increased frequency and unpredictability of geopolitical risks, it could further support the case for a consistent, strategic allocation to Gold. However, history suggests such geopolitical events tend to remain short-lived as gold may well be positioned to erase its gains this week amid more focus on US & China macro cues.

Gold also witnessed moderate pressure from rising yields, with Treasury futures edging further down in Asian trading today reversing last week’s flight-to-quality gains that were driven by haven demand. Among macro cues due to be published this week, US Retail Sales, China’s GDP and industrial production numbers and various Fed member speeches will be due this week that could give further direction to the precious metals complex.

What lies ahead? 

Spot Gold remains firm for the week, supports exist in the range of $ 1900-1905 per ounce levels

  • Gold continues to remain positively biased for the week amid continuing geopolitical tensions and slowdown concerns from China to limit downside losses for the week.
  • US retail sales are among the key releases to watch this week. With credit card delinquencies on the rise and the resumption of student loan repayments in September, it seems likely that the numbers come in a little softer than recently.
  • The consensus expectation is still for a 0.3% MoM increase, though only 0.1% MoM for the control group, which would be the second straight month of 0.1% MoM if it happened.  Still, this would hardly represent a collapse and could keep sentiments slightly positive for Gold
  • China’s macro cues could signal improving sentiments for the economy as 3       Q GDP could claw its way to this year’s GDP target. Also, improvement seen in Fixed asset investment could signal improving prospects for the economy which could weigh on gold prices.
  • Overall we anticipate spot gold to trade in the range of $ 1905 – 1938 per ounce in International spot markets for the week.


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