Gold price logs 1.3% weekly gain. Should you buy after Jackson Hole meeting?

On what helped gold prices to bounce back from support levels, Navneet Damani, Senior VP – Commodity Research at Motilal Oswal said, “Last week, Manufacturing and Services PMI data from major economies were reported well below estimates, supporting an up-move in bullions. However, the number of Americans filing new claims for unemployment benefits fell for a second straight week, US Core Durables goods orders data was also reported better than expectations.”

Motilal Oswal expert said that ahead of the important Jackson Hole symposium, probability chart from CME Fed-Watch tool also witnessed a drop in probability for a pause in September meeting by 5 per cent to 80 per cent.

Speaking on gold price outlook, Sugandha Sachdeva, Executive Director & Chief Strategist at Acme Investment Advisors said, “Gold prices advanced during the week by around 1.30% in the international markets, while in the domestic markets, gold experienced modest gains due to the rupee’s appreciation. The precious metal showcased an attempt to recoup the losses sustained in the previous week. Yet, its endeavors encountered renewed pressure as cautious investors preferred the safety of the dollar, which has been on a rising spree for the past six consecutive weeks.”

Acme Investment Advisors expert went on to add that investors were closely focused on Fed Chair Powell’s speech for cues on the future trajectory of US central bank interest rate adjustments. In his keynote address at the annual Jackson Hole symposium, the Fed Chair emphasized the intent to keep restrictive monetary policy aimed at steering inflation toward the 2 per cent target. However, he underscored that the US central bank would adopt a cautious and data-driven approach towards any future rate hikes as there may still be a significant impact on the economy from past rate hikes.

Important levels to watch

Advising buy on dips strategy to gold investors, Sugandha Sachdeva said, “For the week ahead, gold prices seem to find buying support at lower levels of around ₹58,100 per 10gm, while on the higher side, the ₹59,000 per 10gm mark will act as a stiff hurdle. While the prevailing trend looks positive, breaching the ₹59,000 per 10 gm threshold will be crucial to prompt further upward momentum towards ₹59,500 per 10 gm, else consolidation is likely.”

On important levels in regard to gold rates today, Anuj Gupta, Head – Commodity & Currency Research at HDFC Securities said, “In international market, gold prices has initial support at $1,900 per ounce levels whereas it has crucial support placed at $1,880 levels. On breaching this crucial support levels, yellow metal may become highly bearish. However, much would depend upon the outcome from Jackson Hole meeting.”

Expecting strong bounce back in silver in comparison to gold, Sugandha Sachdeva said, “Gold-silver ratio today is currently hovering around 79.31, reflective of gold trading at approximately $1914.60 per ounce and silver at around $24.14 per ounce. This ratio shift suggests that silver’s performance has surpassed that of gold, with the ratio nearing a crucial support point at 78. Should this threshold be breached, silver’s outperformance might intensify due to the rising industrial demand for the white metal in solar panels, 5G technologies, in silver oxide batteries and electrical equipment.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

Updated: 26 Aug 2023, 02:56 PM IST