Weekly Review: Gold Prices and the Impact of Indian Market Sentiment

🪙 Weekly Review : Gold Prices
Physical gold demand in India remained subdued this week despite a slight correction in prices as buyers awaited an even bigger drop, while Chinese premiums slipped for the second straight week due to sluggish holiday demand. In India, domestic prices fell to around 70,500 rupees per 10 grams this week, after reaching a record high of 73,958 rupees last month. Buyers are cautious, anticipating further price declines following a significant rally in the past two months. Ashok Jain, a Mumbai-based gold wholesaler, highlighted that although prices are decreasing, demand has not picked up, with buyers expecting sharper price drops.

👉Indian dealers charged a premium of up to $1 an ounce over official domestic prices this week, a decrease from the previous week’s premium of $5. The upcoming Akshaya Tritiya festival, a significant gold-buying occasion in India, could potentially boost demand if prices remain stable or correct further. This festival often sees increased gold purchases, especially if prices are favorable.

👉Financial markets faced uncertainty, with XAU/USD hovering around $2,300. The US Dollar’s movements were influenced by market sentiment, strengthening with optimism and weakening with negative news. The Federal Reserve’s recent announcements indicated a slower pace of decline in securities holdings, with interest rates remaining unchanged. Chairman Jerome Powell’s comments reflected a cautious approach, emphasizing the importance of inflation and labor market conditions in future policy decisions.

👉The labor market in the US showed signs of tightness, with the private sector adding 192K new positions in April. The upcoming Nonfarm Payrolls report is expected to show an addition of 243K jobs, with the Unemployment Rate remaining steady at 3.8%. These figures will provide insights into the economic health of the US and may impact market expectations regarding the Fed’s future policy decisions.

👉Gold price traders remained cautious, focusing on the US NFP report and the Fed’s stance on interest rates. The Fed’s indication of a potential rate cut in the future, coupled with a weaker US Dollar, influenced the demand for gold. Market participants are awaiting the NFP report to gauge the economy’s performance and its implications for future Fed decisions. The jobs data will likely shape market expectations and impact the USD, providing direction for gold prices in the near term.

Technical view on Gold for next week

👉Gold is trading at the apex of a 3-week descending triangle formation. I expect false moves in both direction with medium term support at $2,250 and resistance $2,350 over the coming weeks.

👉Clearly level of $2290 was given to you last week and it did hold during the week. Post FED meet some surprises came in from them but gold is not able to hold higher levels.

👉Last week FED came out with 2 crucial points, one was that it cleared the air that no further rate hikes should be anticipated and further easing the quantitative tightening. NFP data also was quite below the estimate, both these events would have easily taken gold much higher. Since last 3 weeks post the war easing, its quite evidently seen that lower lows and higher highs pattern is getting build every week.

👉For the next week seems that we will have a ceasefire deal between Israel and Hamas which should be quite negative for the gold market if at all it happens over the weekend. If this doesn’t go through then in India there could be possibility that till Akshay Tritiya we might not see a major drop and would remain sideways. For the week nothing major apart from a few data points would come in from USA.

👉DXY is not at all looking strong, major support at 104.50, once broken can go further lower. The rise was mainly due to the safe heaven buying due to the war escalation but looks like things getting normalised and its heading down.

👉For the next week just, important level would be $2280, breach of this level will open further downside $2270, $2250 and $2230 all 3 levels would be a possibility. As we are hitting lower highs now till we don’t breach the weekly closing which is $2305, worst case scenario $2330 on a closing basis we can see lower levels continue.

👉For this week $2280/$2320 levels need to be seen how it gets respected & INR 71300/69900. Once these levels are broken then $2230/$2330 which ever side we go and INR 71500/69100

Happy Trading!

Commodity Samachar
Learn and Trade with Ease

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