&w=3840&q=100)
Gold outlook: Track key support, resistance amid mixed market signals
Praveen Singh Mumbai
Gold: Slightly up as the US Dollar Index falls
Performance
On August 12, spot gold prices traded between $3,331 and $3,360. The metal fell to $3331 on subdued safe haven demand as US-China extended their trade truce. Investors' hoping for a breakthrough in the US-Russia talks over Ukraine on Friday also pressurized the metal. However, gold recovered as the US Dollar, already weak on rate cut hopes and healthy risk appetite, weakened further on the US President Trump floating a possibility of a lawsuit against the Fed Chair Powell over the Fed's headquarters' renovation. In addition, the BLS nominee EJ Antoni suggesting suspension of the monthly jobs data in an interview conducted before his nomination further weighed on the Greenback.
Data roundup
Much-awaited US CPI report (July) released on August 12 was not much comforting per se. Headline CPI rose 0.2 per cent m-o-m (forecast 0.2 per cent) and 2.7 per cent (forecast 2.8 per cent). However, core CPI, fuelled by services prices, climbed 3.1 per cent y-o-y (forecast 3 per cent y-o-y), fastest pace since February and the most in the last three years. Goods prices, excluding food and energy commodities, were contained. Core CPI accelerated to 0.3 per cent on m-o-m basis, faster than the estimated pace of 0.2 per cent increase. Shelter prices rose 0.2 per cent for a second month. Supercore services climbed 0.5 per cent--fastest pace since January.
Despite elevated inflation readings, odds of a 25-bps cut in the September FOMC meeting stand above 90 per cent, though rate cuts beyond that look less certain.
Trade and tariffs
On August 12, the US President Trump defended his tariff strategy as he said that trillions of Dollars are being taken in tariffs, which has been incredible for stocks and economy. He further said that consumers are not even paying tariffs.
Stephen Miran, the head of the Council of National Economic Advisors, said that tariffs will be borne by foreign companies and there is no evidence of tariffs in inflation.
US Dollar Index and yields
At the time of writing this article, the US Dollar Index was hovering around 98, down nearly 0.5 per cent for the day. Ten-year US yields recovered on Trump threatening Powell with lawsuit and were steady at 4.29 per cent, while 30-year yields at 4.88 per cent were up by 0.60 per cent.
Upcoming data
PPI (July) will be released on August 14, while August 15, a national holiday in India, is packed with crucial data like retail sales (July), industrial production (July), University of Michigan sentiment and inflation expectations (August prel.) along with import and export price indices (July).
Apart from data, as rate cut expectations grow despite high inflation, focus will be on Fed speakers, too.
Gold ETF and COMEX inventory
Total known gold ETF holdings surged to 92.513 MOz, a fresh-cycle and 2-year high. ETF holdings have risen 11.63 per cent YTD. As of August 11, COMEX gold inventory stood at 38.617MO. Inventory has risen 5 per cent since mid-July.
CFTC
As per the weekly CFTC data, money managers increased their bullish gold bets by 18,965 to 161,811 as short-only positions fell 4,427 lots to 31,612 lots, lowest in more than five months.
Fed watch
Richmond Fed President Barkin said that although uncertainty over the direction of the US economy is decreasing, balance between jobs and economy is unclear.
Trump said that he may allow lawsuit against Fed Chair over renovation of Fed headquarters.
Kansas City Fed President Jeffrey Schmid said on Tuesday that the policy rate is not far from neutral, but inflation remains too high. He cited limited impact of tariff on inflation as a reason to keep rates steady.
Gold Outlook
Fundamentals of the shiny metal remain quite constructive on tariff tensions, growing global fragmentation, rising risks to the US Dollar, elevated institutional risk, heightened fiscal concerns in key economies and rate cut possibilities despite high inflation. However, in the near-term, safe haven demand is somewhat subdued due to US-China trade truce extension and hopes from the upcoming US-Russia meeting in Alaska. In such a scenario, gold is likely to be somewhat rangebound, albeit in a wide range of $3,290 (Rs 98,400)- $3,375 (Rs 101,000) unless more clarity emerges in the US-Russia talks. Next major resistance is at $3,420 (Rs 102,300).
Possibility of a realistic and agreeable outcome in the Alaska talks is slim; thus, buying the dips is advisable. It is to be noted that the outcome will affect the domestic currency also.
Below $3,290,the next major support is at $3,250 (Rs 97,200).
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Indian Express
17 minutes ago
- Indian Express
India does not have the economic leverage vis a vis the US that China does
Between December 2022 and July 2025, China accounted for about 47 per cent of all crude oil and 44 per cent of the coal exported by Russia, as against India's corresponding purchase shares of 38 per cent and 20 per cent. Despite that, US President Donald Trump has slapped India with a 25 per cent 'penalty' for buying Russian energy. This rate, to be effective from August 27, would take the total tariff on Indian goods imported into the US to 50 per cent. China has not only escaped such punishment, but has actually seen a lowering of the duty on its goods from 145 to 30 per cent since May 12. On Monday, Trump extended his trade truce with China for a further 90-day period till November 10. At the same time, his Treasury Secretary, Scott Bessent, has threatened additional 'secondary tariffs' on India if the outcome of Trump's Friday meeting with Russian President Vladimir Putin isn't favourable. This blatantly divergent treatment, further eroding the credibility of the current Western sanctions regime, has significantly to do with relative economic leverage — China is seen to possess much more of it. The most visible demonstration of that was when, in early April, it imposed export restrictions on rare earth elements and magnets that are indispensable, whether for auto, aerospace, defence, semiconductor, renewable energy or consumer electronics manufacturing. China could use its virtual global monopoly over the mining and processing of these critical minerals to bring Trump to the negotiating table. Rare earths apart, China also played the trump card of being a massive buyer of US agricultural produce — from soyabean, cotton and coarse grains to beef, pork and poultry meat — sharply reducing the imports of these to signal its capacity for retaliation in any unilateral trade war. On the face of it, India does not have that sort of economic leverage. Barring, say, pharmaceutical products, much of what it exports to the US — readymade garments, gems and jewellery, frozen shrimps, basmati rice or even steel and aluminium — aren't items for which there are no alternative suppliers. Nor are Indian imports of California almonds comparable to the humongous quantities of Midwest US soyabean and corn that China was, until recently, sourcing to feed its swine and poultry birds. Given how much it stands to lose in any prolonged trade war — the worst-affected industries are also the most employment-intensive — the best approach for India to adopt is strategic patience. What the Indian foreign policy establishment and its trade negotiators should emphasise is the country's importance to global economic and regional stability, which aligns with the US's own long-term interests.
Mint
17 minutes ago
- Mint
The case for interest-rate cuts is weak. But Trump is still likely to get them.
President Donald Trump's unstoppable force of will is likely to triumph over Federal Reserve Chairman Jerome Powell's immovable object of caution when it comes to lower interest rates. But the case for cuts is growing harder to make, even as market bets for it harden like cement, and the end result might not deliver what the president truly wants. From the broadest helicopter view, the world's biggest economy isn't in need of extra support. Stocks hit their 17th record high of the year on Wednesday, extending an extraordinary rally that has lifted the S&P 500 nearly 30% from its early April trough. Risk assets such as Bitcoin and Ethereum are trading at or near all-time peaks, retail investors are bullish, new tech listings are soaring on new initial public offerings, and small-cap stock gains are outpacing the S&P 500 since the early April trough. House prices are pegged near the highest levels in history. The job market is cooling, at least according to data from the Bureau of Labor Statistics proper to the firing of the person in charge of collecting it, but the headline unemployment rate is hovering at 4.2%, an historically low level that by no means suggests deep distress in the labor market. Atlanta Federal Reserve President Raphael Bostic, in fact, told an event in Alabama Wednesday that full employment gives the central bank the 'luxury" of waiting on inflation data to determine their next move on rates. And that is trending higher. Core consumer prices, which strip away volatile components such as food and energy, rose at an annual pace of 3.1% last month, according to the BLS's July inflation report. Economists expect the pass-through of tariffs, which were reset at higher rates earlier this month, to accelerate through the autumn and beyond, and lift consumer prices higher as a result. 'We calculate that the average effective tariff rate on U.S. imports has climbed to 19% this month, from 15% at the end of June," said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. 'Those additional costs will hit consumers in the fall and winter." It's no better on the factory side, either. Producer prices surged by 0.9% last month, BLS data showed Thursday, and were pegged at an annual rate of 3.3%. Put simply, the case for lowering interest rates, which investors usually associate with stresses in the domestic economy or slowing inflation pressures, is tissue-paper thin. And yet it's likely to happen at least three times this year, according to forecasts published Thursday by Goldman Sachs, with more cuts expected in 2026, as well. The hard conclusion that can be drawn from this paradox is that president Trump's effort to pressure the Federal Reserve has been a success. And Powell now finds himself in an even less enviable position. If he doesn't lead the case for rate cuts, even though the logic for maintaining the current level of policy restriction is sound, it will be seen as an overtly political act. If he does lower rates, he'll be seen as having bent to the will of the president. Markets, meanwhile, aren't providing him with much cover at this point. Short-term Treasury bond yields, the most-sensitive to interest-rate changes, are trading at the lowest levels in nearly three years in anticipation of a September reduction. 'Believe it or not, there is an unwritten feedback mechanism between the markets and the Fed," said Mark Malek, chief investment officer at Sibert Financial. 'There are times when the market displays its willingness to accept rate hikes, and there are other times when the market says 'cut rates, or else,'" he added. 'It's likely to have to relent to the markets for cuts this time." But the president's desire for lower longer-term bond yields, which he sees as helping reduce the cost of government borrowing, may not emerge as cleanly as he imagines. Last September, when the Fed cut rates by 50 basis points despite inflation pressures that hadn't been fully tamed, 10-year Treasury note yields rose nearly 90 basis points over the next three months. Barring an unforeseen surge in hiring, or a massive change in inflation readings, the Fed's going to cut rates in September. The president, the Treasury, and the markets have effectively ensured they'll get what they want. But is it what they really need? Write to Martin Baccardax at
&w=3840&q=100)
First Post
17 minutes ago
- First Post
Rubio hails India-US ties as he extends warm wishes on Independence Day
US Secretary of State Marco Rubio on Friday released a statement wishing India on its Independence Day. In the statement, Rubio hailed strong ties between the 'world's largest and oldest democracies'. India's External Affairs Minister S Jaishankar with US Secretary of State Marco Rubio in Washington, The meet with Jaishankar was Rubio's first as secretary of state. Image Courtesy: @DrSJaishankar/X Amid strained ties, the US Department of State released a statment, wishing India on its 78th Independence Day. On Friday, the department released a statement hailing the strong ties between the 'world's largest and the oldest democracies.' In his wishes, US Secretary of State Marco Rubio said that India and the US share a vision in the Indo-Pacific region and a partnership across different sectors. 'On behalf of the United States, I extend our congratulations and warm wishes to the people of India as they celebrate their Independence Day on August 15,' Rubio said in a statement on Friday. STORY CONTINUES BELOW THIS AD 'The historic relationship between the world's largest democracy and the world's oldest democracy is consequential and far-reaching. Our two countries are united by our shared vision for a more peaceful, prosperous, and secure Indo-Pacific region.' 'Our partnership spans industries, promotes innovation, pushes the boundaries of critical and emerging technologies, and extends into space,' the statement further reads. Rubio insisted that both nations should work together to overcome the modern challenges that the world currently faces. 'Working together, the United States and India will rise to the modern challenges of today and ensure a brighter future for both our countries,' Rubio averred. India-US ties remain strong amid tensions India-US ties have deteriorated significantly after Trump announced nearly 50 per cent tariffs on Indian goods. The White House argued that the tariffs were imposed because India purchased Russian oil amid the ongoing Ukraine war, with senior officials in the Trump administration accusing India of helping Russia in the conflict. While economic ties between the two nations have witnessed a strain, the Ministry of External Affairs (MEA) on Thursday underlined the importance of defence ties between India and the United States, terming them as a key component of the overall bilateral relationship. 'The India–US defence partnership, underpinned by foundational defence agreements, is an important pillar of the bilateral partnership,' MEA spokesperson Randhir Jaiswal said at a media briefing on Friday. 'This robust cooperation has strengthened across all domains. We are expecting a US Defence Policy Team to be in Delhi in mid-August. The 21st edition of the joint military exercise 'Yudh Abhyas' is also expected to take place later this month in Alaska. Both sides remain engaged to convene the 2+2 Intersessional meeting at the working level towards the end of this month,' he added. STORY CONTINUES BELOW THIS AD However, on the recent Human Rights report issued by the US State Department, Jaiswal reiterated India's strong objection, saying such assessments were 'a mix of imputations, misrepresentations and one-sided projections' that showed 'a poor understanding of India's democratic framework, pluralistic society and robust institutional mechanisms for protecting human rights.' Jaiswal also noted that no decision had yet been taken on whether Prime Minister Narendra Modi would attend the United Nations General Assembly next month.
