Gold prices continue to exhibit volatility as recent market trends indicate a correction below the $4,000 per ounce mark, attributed primarily to a hawkish tilt from the Federal Reserve. Analysts expect the precious metal to trade within a broad range of $3,880 to $4,150 per ounce on a weekly basis.
Maneesh Sharma, an AVP at Anand Rathi Shares and Stock Brokers, notes that while short-term fluctuations may lead to sideways trading, the long-term upward trend remains intact. Traders are closely monitoring the situation for potential cues regarding rate cuts, especially as the likelihood dropped from approximately 65% to below 50% following stern comments from several Fed officials.
The environment took a turn when the U.S. government reopened after President Donald Trump signed a funding bill to end the record 43-day shutdown. Federal employees have resumed their duties, putting investors in a position to assess the implications of delayed economic data that arose during the shutdown.
Despite this uncertainty, the overall trend for bullion has seen a remarkable surge of 55% this year, on track for its most significant annual gain since 1979. This increase is attributed to strong central bank purchases and a consistent demand from investors seeking refuge from rising fiscal and geopolitical risks. Reports indicate that central banks collectively purchased approximately 64 tons of gold in September, significantly more than the previous month’s figures, with China alone reportedly adding around 15 tons.
Looking ahead, market watchers will receive vital labor market data, with the Bureau of Labor Statistics set to release the September jobs report. This data may provide insight into the state of the U.S. economy following the lengthy shutdown, potentially influencing future pricing for gold.
In terms of the weekly outlook, gold prices are expected to exhibit a sideways to slightly negative bias, particularly as the market awaits macroeconomic cues. The upcoming FOMC meeting minutes and the U.S. payroll report will be crucial for determining price direction. If gold fails to maintain levels above $4,050, it may test lower support levels towards $4,000.
In parallel, silver has also demonstrated volatile movements, recently testing significant resistance levels near $55 for the second time after earlier peaks. Despite a drop to approximately $50, silver recorded a weekly gain of 4.67%. Future projections for silver suggest sustained volatility within a range of $48.50 to $52.40 per ounce.
Meanwhile, the U.S. dollar is facing challenges in building on recent gains due to ongoing concerns about weakening economic momentum, particularly in light of the ramifications of the government shutdown. As the market continues to absorb these developments, expectations remain for gold to trade within the previously mentioned range, reflecting the complex interplay of fiscal policies and market sentiment.
Investors are advised to tread carefully as they navigate this landscape, considering the diverse influences at play in the current economic environment.
