1 week ago
Gold Prices Under Pressure as Investors Watch Fed Decision
Gold prices have fallen because strong US jobs data made investors think interest rates could stay higher.
Higher rates can make gold less attractive because gold does not pay interest.
The US jobs report showed 162,000 new jobs in August, much more than expected.
The Federal Reserve will make an important rate decision on September 16.
Some experts expect gold to remain weak for the next two weeks.
Another expert believes the decline may only be a pause in gold’s broader uptrend.
Political tensions and high oil prices could still support gold because investors often seek safer assets during uncertainty.
Investors are watching inflation data and specific price levels to judge what happens next.
Spot gold fell 0.7% to $4,398.13 an ounce on Monday after dropping 1% on Friday.
US nonfarm payrolls rose by 162,000 in August, far exceeding the forecast of about 53,000.
Stronger employment data lifted market-implied odds of a September Federal Reserve rate hike to about 59%-60%.
Analysts identified $4,330 as key international gold support and $4,490-$4,535 as resistance.
MCX gold support was placed at ₹1,49,000-₹1,47,000, with resistance at ₹1,55,500-₹1,57,100.
- Who
- Gold and silver investors, the Federal Reserve, and analysts Ashish Rajodiya, Rajeev Sharan, and Renisha Chainani.
- What
- Gold prices declined as strong US employment data increased expectations of higher interest rates, while analysts outlined key support and resistance levels.
- Where
- International markets and India’s MCX market.
- When
- The decline was reported on Monday, ahead of US inflation data and the Federal Reserve’s September 16 rate decision.
- Why
- Stronger employment increased the possibility of a rate hike and raised the opportunity cost of holding non-yielding gold, although geopolitical tensions and elevated crude oil prices continued to support safe-haven demand.
Near-Term Pressure
Correction Within Broader Uptrend
Gold’s immediate outlook
Near-Term Pressure
Rajeev Sharan expects gold to remain under pressure over the next two weeks, particularly if the Federal Reserve raises rates or maintains a hawkish stance.
Correction Within Broader Uptrend
Ashish Rajodiya says gold and silver remain well above their recent lows, suggesting the decline may be a pause rather than a genuine reversal.
Main market drivers
Near-Term Pressure
Stronger employment, a potentially firmer dollar, higher Treasury yields, and a stronger rupee could reduce gold’s appeal and limit domestic prices.
Correction Within Broader Uptrend
Geopolitical tensions, elevated crude oil prices, resilient physical and investment demand, and safe-haven buying could support gold.
Impact of Federal Reserve guidance
Near-Term Pressure
A rate hike or hawkish hold could attract money toward higher-yielding bonds and make non-yielding gold less attractive.
Correction Within Broader Uptrend
A softer Federal Reserve signal could quickly improve the outlook for gold, according to Sharan.
Key facts
- Spot gold
- Down 0.7% to $4,398.13 per ounce on Monday; it fell 1% on Friday.
- US jobs growth
- Nonfarm payrolls increased by 162,000 in August, compared with an expected rise of about 53,000.
- Unemployment rate
- Held at 4.1%, in line with expectations.
- September rate-hike odds
- Market-implied odds rose to about 59%-60%, from roughly 50% before the jobs report.
- International gold levels
- Support at $4,330; resistance at $4,490-$4,535.
- MCX gold levels
- Support at ₹1,49,000-₹1,47,000; resistance at ₹1,55,500-₹1,57,100.
- Upcoming triggers
- US PPI and CPI data, followed by the Federal Reserve’s September 16 policy decision.
Quotes
Rajeev Sharan
Head of Research at Brickwork Ratings
“Gold prices are likely to stay under pressure over the next two weeks, with the September 16 Fed decision a key trigger. Any hike, or even a hawkish hold, could lift Treasury yields and make non-yielding gold less attractive.”
livemint.com
Sources
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