Analysts expect that gold and silver prices will maintain positive momentum next week, although high volatility is likely to persist due to the developing situation in the Middle East and the release of key global economic data.
Market participants will closely monitor housing and trade data from the US, inflation figures from the UK, Eurozone, and Japan, as well as economic indicators from China for signals regarding industrial metals. Furthermore, markets will analyze the minutes of the Federal Open Market Committee (FOMC) meetings to gauge the prospects for the US Central Bank's monetary policy.
Pranav Mer, Senior Vice President of Commodities and Currency Research at JM Financial Services Ltd, stated that the outlook for gold and silver remains optimistic, with expectations that they will rise to levels of approximately 1.57 lakh per 10 grams and 2.54 lakh per kilogram.
In the domestic market, October delivery gold futures rose by 2,686 rupees last week, representing almost 2 percent, closing at 1.54 lakh per 10 grams on the MCX exchange. Silver on the MCX exchange, under the September contract, increased by 4,458 rupees, or 1.9 percent, reaching 2.35 lakh per kilogram.
Jatin Trivedi, Vice President of Commodity and Currency Analytics at LKP Securities, noted that gold showed growth this week, increasing by 1 percent, and the rally continued by more than 2 percent at its peak before profit-taking began at higher levels. He also added that gold on the MCX exchange grew by almost 9.5 percent in August, making consolidation and periodic profit-taking at elevated levels more likely in the near future.
In international markets, December delivery gold futures on Comex rose by $37.6, or almost 1 percent, last week, reaching $4,437.3 per ounce. Silver in New York rose by $1.61, or 2.5 percent, amounting to $65.11 per ounce.
Mer reported that gold futures closed higher for the second consecutive week; however, after rising 11 percent from below $4,000 per ounce, they remained in consolidation. Precious metal prices received support as traders lowered expectations for a US Federal Reserve rate hike in September after non-farm payroll data came in weaker than expected and inflation remained stable, while other economic indicators remained mixed.
Furthermore, demand for safe-haven assets supported gold amid the conflict in the Middle East and tensions between the US and Iran around the Strait of Hormuz, as no visible resolution to the conflict has been observed, Mer added. Silver also maintained a positive trend, although prices consolidated as the recent rally in industrial metals slowed down.
According to Trivedi, the key factors determining precious metal prices will remain the US dollar, interest rate expectations, and the geopolitical situation.
