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Gold slips ahead of key US inflation data; Investors cautious on Fed Policy outlook
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Gold fails to shine as prices for the safe-haven asset slip despite Fitch Ratings downgrade
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Gold prices saw a sharp movement after US CPI rose 0.9 per cent in June. The prices, however, are still struggling despite hotter-than-expected inflation data as rising inflation could force the Federal Reserve to tighten interest rates sooner than expected. So we are expecting limited upside despite inflation running higher and not looking transitory. Gold is struggling to sustain above $1812 and what is surprising is that there are plenty of tailwinds for gold to push prices higher. During the previous week, we saw real interest rates drop below -1 per cent for the first time since April. China, last Friday, cut interest rates and lowered reserve requirements for banks, unleashing around 1 trillion yuan back into the economy. Despite all this positive news, gold is lackluster after climbing to $1800. With the US treasury yields dropping at 1.3 per cent, Gold should easily be trading above $1850. 47,500 is the support that is appearing to be saving grace for bulls while 48,100-48,
Gold, in COMEX, managed to break $1,800 on the upside, on Tuesday, but lost altitude as other asset classes saw sharp reversal. Metals, as well as energy class, saw sharp decline which sent gold and silver running for cover. We saw USD pushing decent gains. However, gold has, once again, managed to trade near $1,800 and we believe, slowly and steadily, gold will try to climb back up. Currently, gold bulls and bears are on level playing field with gold crashing below $1,780 will give bears upper hand while prices above $1,820 will give bulls upper hand. We recommend intraday any dip to go long with expected target of 48,000. Previous resistance of Rs 47,300 has now become support and gold should hold its head above water as long as it is trading above its support of Rs 47,300.
Gold prices are trading at a 2-month low as US consumer confidence index came in better-than-expected in June and is now at pre-pandemic levels. Gold prices remain under strong pressure as market participants are active sellers as yields for government debt instruments have seen an increase. Increased yields, along with dollar strength, were the contributing factors for lower pricing in gold on Tuesday. Higher short-term inflation expectations are not impacting the consumer mindset just yet. This week s two main headwinds are a stronger US dollar and higher US Treasury yields in the marketplace that is not seeing a lot of risk aversion. This is a good time for the dollar because the US is seen as the best place to be during the pandemic due to its quick vaccine rollout. Right now, gold bears have near term technical advantage as it managed to breach its support level of 46,600 in the MCX. The key to the future direction of gold will be Friday’s jobs report by the US labor departm
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