Bullion Forecast: Yesterday gold prices came under pressure as after recovering till $1680, it dropped sharply to $1661 on account of a jump in US dollar. The US Dollar jumped as GBP saw sharp drop after Bank of England Governor Andrew Bailey warned fund managers they have until the end of this week to wind up positions as BOE is looking to end its bond buying program.
However today we saw some spike in GBP and Gold after rumors are circulating that BOE may extend the bond buying program. Despite these rumours, gold remains under pressure as it is trading below $1700 and tomorrow’s US inflation data which is expected to show inflation will remain persistently high will give Dollar additional boost to rally. Today’s Fed minutes is also likely to show that policymakers remain willing to inflict serious economic pain on the U.S. and global economies as they try to bring down inflation. So gold is expected to remain under pressure at least till tomorrow and may see relief rally if inflation does not come sharply higher. Any positional traders should wait for deep correction till 50100 for going long.
Gold prices inched lower for the fifth consecutive session, as traders looked forward to U.S. Federal Reserve minutes and key inflation data for clues on the pace of future interest rate hikes. The FOMC will issue minutes of its Sept. 20-21 meeting later in the day. The U.S. inflation reading will be released on Thursday and could cement expectations of another big rate hike at the November meeting. We already are at a 80% probability for a fourth 75bps rate hike scenario this year, according to the CME Fed watch tool.
Fed official, President Loretta Mester said that even with a large amount of rate rises this year, the central bank has yet to get surging inflation under control and will need to press forward with tightening monetary policy. This continuous comments from Fed officials since last week, has weighed on the safe haven appeal for gold and silver prices. The IMF also cut its global growth forecast and warned that colliding pressures from inflation, war-driven energy and food crises and sharply higher interest rates were pushing the world to the brink of recession. Focus today will also be on UK GDP, US PPI and CPI data on the domestic front. Broader trend on COMEX could be in the range of $1650-$1680 and on domestic front prices could hover in the range of Rs 50,300-51,300.
Comex spot Gold is back below the $1680 level, as the dollar regained its safe haven appeal before Fed minutes, which is due later in the day. It is expected that Fed’s stance will remain hawkish in the upcoming policy meeting. They will continue to raise the interest rates by 75 basis points to check the high inflation. US inflation data, which will be released this week, may define the Gold trend for the month of October.