US CPI data to dollar index: 5 triggers that may dictate gold price in near term
Premium- Gold price outlook for neat term is positive but profit-booking after rebound in dollar index is widely awaited, say experts
Gold price outlook: Gold prices climbed to a one-month high during the week gone by testing the key $1800 per ounce mark levels in spot market, as weakening factory activity data released from various economies caused deepening concerns of a slowdown in global economic activity. Another key variable behind the recent surge in yellow metal price was the plunge in dollar index where it came down to near 105 mark, before witnessing a significant rebound and printing gains for the week. Besides, escalation in tensions between China and Taiwan amid US House Speaker Nancy Pelosi’s visit to Taiwan, much to the dislike of China, favored interest in gold as a safe haven.
As per the bullion experts, overall outlook for gold price is positive but profit-booking after rebound in dollar index is widely awaited and spot gold price is expected to go around $1,750 to $1,720 per ounce levels. so, one has to remain vigilant about the possible triggers that may impact movement of gold prices in near term.
Here we list out top 5 triggers that may impact gold price next week:
1] US CPI data: "Key trigger for gold price would be the US Core CPI and CPI data for July that will indicate inflationary trends in the economy. Annual Inflation in the US had accelerated to 9.1% in June, a fresh 41-year high. The upcoming inflation data would be quite crucial as only a moderation in price pressures would mean that the Fed will slow down its pace of monetary tightening," said Sugandha Sachdeva, Vice President — Commodity & Currency Research at Religare Broking.
2] Dollar index: "Eyes would also be on the movement of the dollar index. The greenback is seen forming a base at the 105 mark and is likely to remain well bid at least in the near term, which could be a significant headwind for gold prices. On the contrary, if the dollar index breaches the key 105 mark, it would provide a thrust to gold to continue with its upwards momentum," said Sugandha Sachdeva. She said that direction of the Indian rupee which witnessed sharp swings last week would also be on investors’ radar and shall impact domestic gold prices.
3] US Fed speech: "We have speeches from two key Fed officials lined up next week that will throw light on the US central bank's monetary policy path ahead," Religare expert said.
4] US China Taiwan issue: "After Russia-Ukraine war, fresh geopolitical tension has surged between US and China that may keep the demand for gold in near term. Any further escalation of tension between US and China on Taiwan is expected to provide support to gold price rally," said Anuj Gupta, Vice President — Research at IIFL Securities.
5] Industrial numbers from Eurozone, others: Industrial production data from the UK and Eurozone, China CPI and PPI data as well as OPEC monthly report shall provide ample cues for gold prices and keep the precious metal prices volatile throughout the week.
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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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