Gold and silver show consistency amid dollar fluctuations; yellow metal prices reach near two-week high

Gold prices opened on the Multi Commodity Exchange (MCX) on Friday at Rs 58,743 per 10 grams and hit an intraday low of Rs 58,696. In the international market, prices hovered around $1,913.98 per troy ounce. Meanwhile, silver opened at Rs 73,317 per kg and hit an intraday low of Rs 73,281 on the MCX. The price hovered around $24.05 per troy ounce in the international market.

Yesterday, spot gold closed with a slight gain of 0.15% at $1917. The US Dollar Index was up on firmer yields as the Index rose 0.62% to close at 103.99.

Praveen Singh, Associate VP, Fundamental Currencies and Commodities, Sharekhan by BNP Paribas, said, "Twos were up by 5 bps while tens gained 4 bps. Chinese Yuan was weaker as strengthening on the prop up efforts of the Chinese Central Bank gave way to underlying fundamental weakness."

The US data were mixed as initial jobless claims (August 19) came in at 230,000 versus a forecast of 240,000, thus falling to three-week low. Preliminary reading of July durable goods orders data was recorded at -5.20% Vs the forecast of -4%, though durables ex-transportation at 0.50% was stronger than the expected reading of 0.20%.

Japan's Tokyo inflation data released today are a tad softer than expected, thus supporting the Dollar Index to rise above 104.

"Today's major macroeconomic releases include final reading of University of Michigan sentiment and University of Michigan one-year and five-ten year inflation expectations. Out of the Euro-zone, focus will be on Germany's Q2 final GDP and IFO business climate (August). However, the most important event of the day is the Federal Reserve Chair Powell's speech at Jackson Hole symposium. If he calls for data dependent approach, gold may recover further as some of the vital data like services PMI, durable goods orders, etc reflect slight weakness in the US economy," said Singh.

Deveya Gaglani, Research Analyst - Commodities, Axis Securities, pointed out that the MCX Gold prices were able to sustain above the immediate zone of 58600 level, which is a positive sign for prices, which is a positive sign for prices.

Additionally, it closed above 9 EMA on the daily chart, and the momentum indicator RSI is also trading above its reference line, which is a positive sign for prices. "Gold prices traded sideways in the last session and in a tight range between 58600 and 58900 levels. Today's focus will be on the speech by the Fed chairman, as it is expected to provide further insights into potential monetary tightening. This could have implications for the price of bullion."

US 10Y Yield after dropping by more than 2% in the earlier session is inching higher once again.

Manav Modi, Analyst, Commodity and Currency, MOFSL, said, "Gold prices steadied near two-week highs and was headed for their best week in six ahead of mixed economic data from the US and as market participants await comments from Governors of major central banks including Fed Governor Powell that could guide on future interest rates."

Earlier this week, Manufacturing and Services PMI data from major economies were reported well below estimates, supporting an up-move in bullions. However, the number of Americans filing new claims for unemployment benefits fell for a second straight week, US Core Durables goods orders data was also reported better than expectations.

Modi said, "Two Fed officials tentatively welcomed a jump in bond market yields as something that could complement the central bank’s work to slow the economy and get inflation back to the 2% target, while also noting they see a good chance that no more interest rate increases will be needed. Focus today will also be on the Michigan consumer sentiment data scheduled later in the day."

Anuj Gupta, Head of Commodity and Currency at HDFC Securities, sees technically strong support at 58500 levels and 58300 levels, Resistance at 59000 and then 59200 levels. "We expect market may trade between support and resistance levels. Gold may test $1920 to $1925 levels in international market," added Gupta.

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