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Precious metals fall on reduced rate cut bets AUGMONT BULLION REPORT
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- Gold and silver experience steep selloffs, as investors wait for hints on the Federal Reserve’s policy course from a succession of US economic data releases this week, marking the fourth straight session of losses amid waning hopes for a US interest rate cut.
- A rate cut in December has become less likely due to the absence of US data over the last six weeks and hawkish comments made by a number of Fed officials.
- Thursday’s September Nonfarm payroll data will be eagerly watched by traders for clues about the state of the US economy, and the Fed’s most recent meeting minutes will be released on Wednesday to offer more rate direction. The market’s implied probability of a 25 basis point rate cut in December has dropped from nearly 60% earlier this month to 43% now.
- However, structural tailwinds such as geopolitical unpredictability, worries about the sustainability of US debt, de-dollarisation trends, and central bank purchases are anticipated to sustain investment demand for gold and silver throughout the medium and long term.
Technical Triggers
- Gold has broken an important support of $4050; the next target support is $3950 (~Rs 120,000).
- Silver has broken the important support of $50, the next target support level is around $48.5(~Rs 150,000) and $47(~Rs 145,000).
Support and Resistance
| Category | Support Level | Resistance Level |
|---|---|---|
| International Gold | $3950/oz | $4050/oz |
| Indian Gold | ₹120,000/10gm | ₹122,000/10gm |
| International Silver | $52/oz | $50.5/oz |
| Indian Silver | ₹150,000/kg | ₹153,500/kg |
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- Gold and silver rebounded due to safe-haven demand, while investors awaited the minutes of the Federal Reserve’s most recent policy meeting and the U.S. jobs report, which could provide additional insight into the central bank’s interest rate trajectory.
- Investors are currently waiting for the September non-farm payrolls report, which will be issued on Thursday after being postponed because of the recent U.S. government shutdown, and the minutes from the Fed’s most recent meeting, which are scheduled to be released later in the day.
- Expectations for additional rate reduction from the Federal Reserve were also bolstered by signs of a worsening US job market. Fed Governor Christopher Waller said that companies are talking more about layoffs as they get ready for softer demand and possible productivity improvements from artificial intelligence.
- The likelihood of a 25 bps cut in December is now just about 47% priced into the markets, compared to over 90% a month ago.
Technical Triggers
- Gold has broken an important support of $4050; the next target support is $3950 (~Rs 120,000).
- Silver has broken the important support of $50, the next target support level is around $48.5(~Rs 150,000) and $47(~Rs 145,000).
Support and Resistance
| Category | Support Level | Resistance Level |
|---|---|---|
| International Gold | $3950/oz | $4050/oz |
| Indian Gold | ₹120,000/10 gm | ₹122,000/10 gm |
| International Silver | $52/oz | $50.5/oz |
| Indian Silver | ₹150,000/kg | ₹153,500/kg |
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