Mumbai: Bullion investors are bracing for another turbulent week as gold and silver prices remain highly sensitive to a slew of macroeconomic triggers. According to market experts, upcoming US economic data, inflation figures, bond yields, and simmering geopolitical tensions in West Asia will dictate the trajectory of the precious metals market in the coming days.
The bullion market has witnessed significant fluctuations since the US Federal Reserve initiated its aggressive interest rate hikes. This volatility has been further compounded by crude oil prices breaching the $100 per barrel mark amid escalating Middle East tensions. Analysts predict that this choppy spell is far from over.
Last week, the market remained under noticeable pressure. On the Multi Commodity Exchange (MCX), gold futures saw a drop of approximately 2.3 percent, while silver futures tumbled by nearly 3 percent. International markets mirrored this sluggish sentiment, with gold and silver slipping between 2.3 and 3.5 percent. A persistently strong US Dollar Index, hovering above the 101-mark, has continued to dent the appeal of greenback-priced bullion.
“The market outlook remains cautious, and volatility is likely to stay high,” stated Jatin Trivedi, VP and Research Analyst for Commodity and Currency at LKP Securities. “Markets will closely watch the upcoming US non-farm payrolls and unemployment data. These figures will be crucial in setting expectations for the Federal Reserve’s October policy decision.”
Trivedi further noted that a strong US jobs report could solidify expectations of further rate hikes, putting additional pressure on prices. Conversely, weak employment data could drag the dollar down and provide immediate support to bullion.
Beyond currency pressures, US Treasury yields have struck multi-year highs, making non-yielding assets like gold less attractive despite ongoing uncertainties in West Asia.
Pranav Mer, Senior VP of EBG – Commodity and Currency Research at JM Financial Services Ltd, highlighted that while gold traded within a narrow range for most of last week, it ultimately succumbed to selling pressure. “Silver futures also witnessed a weekly decline due to consolidation and correction in industrial metals alongside gold,” Mer explained.
Mer also pointed to the oil market’s influence, noting that while energy infrastructure remains a target in the Russia-Ukraine conflict, improved supply from Saudi Arabia and Iraq has managed to keep crude prices largely in check this month.
Meanwhile, domestic commodity markets will remain closed on Friday in observance of Mahatma Gandhi Jayanti.