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Gold – Focuses on geopolitics and disappointing US employment data
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At the close on MCX, the spot gold price was at $2,624, up about 0.55 percent on the day. The December MCX gold contract rose almost 0.30 percent to trade at Rs 75,152 (LTP).
Gold rose after six straight days of losses following disappointing weekly US jobless claims data, although expected US CPI inflation data limited gains and led to a volatile session.
Data rounding
The long-awaited US CPI inflation data rose more than forecast in September by every measure. Housing prices, the largest category among services, rose 0.2% from a 0.5% increase in August, while owner-equivalent rents rose 0.3% from the previous month. However, after excluding housing and energy, service prices increased by 0.40%, the highest since April. CPI was 0.2 percent. (forecast 0.1%), CPI year on year 2.4%. (2.30% forecast), core CPI rose 3.3%, the fastest since June, and exceeded estimates of 3.2%, while core CPI CPI rose 3.3%. was 0.30 percent (forecast 0.20%). The number of initial claims increased by 33,000 in the week ended October 5. to 258,000, which is the highest level since August 2023. Even continuing claims amounted to 1.86 million (forecast 1.83 million), which exceeded forecasts. Weekly employment data was disappointing; However, Hurricanes Helen and Milton may have been affected to some extent by rainfall disruptions.
US Dollar Index and Yield
The U.S. dollar index continued its gain for the ninth straight day, rising 0.07 percent to 103. The U.S. 10-year bond yield rose 3 basis points to 4.10 percent, while the 2-year yield fell 0.6 percent to 3 .99 percent. The 2-year bond yield is weak and will likely return above 4 percent.
Geopolitical clock
Israel's security cabinet will meet Thursday evening to discuss Israel's long-awaited response to the Iranian missile attack. Meanwhile, Israel continues its operations in Lebanon and has reportedly carried out attacks in central Beirut.
ETFs
The ETF's total known global gold holdings of 83,521 Moz were slightly lower than last week's level of 83,540 Moz.
Upcoming information
Today's US data includes PPI (September), University of Michigan sentiment (preliminary data for October) and University of Michigan inflation expectations.
Perspectives
Spot Gold supports conflict in the Middle East; However, as Israel's response to the Iranian attack is still expected, the need for a safe haven is not great enough to lead to significant progress. At the same time, a rising U.S. dollar and falling bond prices continue to pose a challenge for bulls. U.S. inflation data and the monthly jobs report in September will allow the Fed to determine its future interest rate cut decisions as the Fed must carefully make monetary policy decisions. If an ongoing war breaks out, gold prices will skyrocket as the impact of data will be limited, at least in the short term.
It is recommended to enter on the weekend, buy dips and avoid large positions.
Support USD 2,600 (Rs 74,500)/USD 2,575 (Rs 73,800). Resistance is at $2,655 (Rs 76,000)/$2,675 (Rs 76,500).
(Disclaimer: Praveen Singh is Assistant Vice President, Core Currencies and Commodities at BNP Paribas Shares. The views expressed are his own.)
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