Gold Prices Increased as the Dollar and US Treasury Yields Fell

  • Commodities Analysis

Gold yesterday settled up by 0.38% at 52489 following a pullback in the dollar and U.S. Treasury yields, while investor focus shifted to U.S. inflation data for clues on the Federal Reserve's rate hike plan. However, robust U.S. job growth reinforced expectations that the Fed will continue to raise rates in the next few meetings to slow inflation. Global gold-backed exchange-traded funds (ETFs) recorded net outflows of $4.5 billion in July as continued US dollar strength and softer inflation expectations weighed on investment activity, the World Gold Council has said. North American and European funds accounted for a major share of the outflows while gold holdings in China increased, the trade body said in a report.  
 
Though this was the third consecutive month of outflows from global gold ETFs and the largest monthly outflow since March 2021, total holdings remain 5 per cent higher so far this year, at 3,708 tonnes worth $209bn, the WGC said. The Fed raised its policy rate by three-quarters of a percentage point. The U.S. central bank has raised that rate by 225 basis points since March, but investors had been assessing recently whether the Fed might be less aggressive in hiking rates in the future.  
 
Technically market is under fresh buying as the market has witnessed a gain in open interest by 1.1% to settle at 16474 while prices are up 201 rupees, now Gold is getting support at 52312 and below same could see a test of 52135 levels, and resistance is now likely to be seen at 52633, a move above could see prices testing 52777.  
 
Trading Ideas:
# Gold trading range for the day is 52135-52777.
# Gold prices rose following a pullback in the dollar and U.S. Treasury yields
# Robust U.S. job growth reinforced expectations that the Fed will continue to raise rates in the next few meetings to slow inflation.
# The U.S. consumer price index report due on Wednesday could offer clues on the Fed's next move.

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