Bank of England to OPEC meeting: Top 5 triggers for gold price in the near term

Gold price shot up by nearly 2.39 per cent in the week gone by, while carrying forward the positive momentum of the previous week driven by a ‘mildly hawkish’ stance of the US Fed on interest rate hike. as expected, the US central bank raised the interest rate by 75 bps for the second month in a row to combat the scorching inflation. However, the US Federal Reserve acknowledged softening economic activity, which soothed concerns about the rapid rate hike path ahead and prompted ‘safe-haven’ buying in gold. Besides, the dollar index was seen nursing losses for the second week in a row, which underpinned gold prices. Weak US GDP data also supported gold price rally.

However, gold investors are advised to remain vigilant about the series of events scheduled next week as they are expected to dictate the yellow metal price in the near term.

Here we list out top 5 triggers for gold rate in near term:

1]BoE meeting: “The BOE has already hiked interest rates five times since December 2021 and with inflation running at a four-decade high, half a percentage point rate increase is among the choices on the table, as the central bank adopts a forceful stance on battling inflation. Additionally, the future guidance by the BOE would be crucial in dictating moves in the pound as well as the dollar index and shall impact gold prices,” said Sugandha Sachdeva, Vice President — Commodity & Currency Research at Religare Broking.

2]RBI MPC meeting: “Market participants would also focus on the RBI monetary policy outcome, which will influence the rupee-dollar exchange rate and will be crucial for the trend of domestic gold prices,” said Sugandha Sachdeva.

3]US job data: US Non-farm payrolls and employment data would provide cues about the health of the jobs market in the US and guide the Fed’s monetary policy path ahead.

“After weak US GDP data, if the US job data also comes disappointing, then dollar index may witness sharp profit-booking and it may come below 105 levels. As farm yield is also sliding day by day, gold is expected to emerge as investors ‘haven in such condition,” said Anuj Gupta, Vice President — Research at IIFL Securities.

4]OPEC meeting: “Attention will also turn to the OPEC and allies meeting during the week and their output policy as that would be very important for shaping the trend of crude oil prices and shall provide hints about the inflation trajectory. Most of the members do not have much spare capacity so it would be difficult for the group to increase output considerably,” said Sugandha Sachdeva of Religare Broking.

5]Manufacturing PMI July numbers: Markets would also closely parse Manufacturing PMI (Jul) numbers from China, the US, and Europe as well as PPI data from Europe.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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