Gold and silver prices declined in the morning deals on Friday, 28 August, as investors took money off the table ahead of US Federal Reserve Chairman Kevin Warsh’s speech at the Jackson Hole symposium later in the day.
MCX gold October contracts were down 0.57% at ₹1,58,085, while MCX silver September futures were 0.55% down at ₹2,39,320 per kg around 9:15 AM.
International gold prices also declined as investors awaited Warsh’s speech; US gold futures December contracts dropped 0.40% to $4,627.95 per troy ounce.
Gold prices are under pressure as inflation concerns grow. Even though the yellow metal is considered a hedge against inflation, this time the fear is that elevated inflation, largely due to the Middle East conflict, could force the US Fed to raise rates from already elevated levels. The federal funds rate is currently in a target range of 3.5% to 3.75%.
At its last policy meeting on 29 July, the kept rates unchanged in the 3.5%-3.75% range for the fifth consecutive policy meeting, as inflation has remained above the central bank’s 2% target for more than five years.
Headline PCE (Personal Consumption Expenditure) increased 3.7% year-on-year in July, showing inflation remained above the Fed’s 2% target for the 65th straight month. Core PCE (Personal Consumption Expenditure) rose 0.2% month-on-month and 3.3% year-on-year.
“Investors await Fed Chair Kevin Warsh’s Jackson Hole speech for clearer policy cues. July core PCE remained elevated, keeping inflation concerns alive, while resilient economic growth supports expectations that the Fed may hold rates steady in September. Elevated U.S. debt and uncertainty in the bond market continue to provide underlying support to gold as a hedge against fiscal and currency risks,” said Ravi Singh, Chief Research Officer at Master Capital Service.
The US-Iran conflict remains a major concern for gold and equity investors, also. According to reports, efforts are underway to resolve the conflict. Qatar Prime Minister and Foreign Minister Mohammed bin Abdulrahman bin Jassim Al Thani met Iranian President Masoud Pezeshkian in Tehran on Thursday as Doha.
According to Reuters, Tehran is preparing a list of conditions to open the Strait of Hormuz in response to a request by mediators.
Gold prices: Key levels to watch
Singh pointed out that MCX gold prices declined, as the formation of a double-top-like pattern near the highs suggests that prices may consolidate or retrace towards ₹1,55,000, which also coincides with the rising 21-day EMA and could offer a good buying opportunity.
On the upside, Singh said ₹1,64,500 remains the key hurdle, and a sustained breakout above this level could attract fresh buying towards ₹1,68,000. Until then, prices may remain range-bound.
Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, said market participants will closely watch Jackson Hole, particularly Kevin Warsh’s speech, for cues on the Fed’s interest-rate outlook, with volatility expected to remain elevated.
He expects MCX gold to trade in a range of ₹1,55,000 to ₹1,61,500.
According to Hemant Sood, Founder and Managing Director at Findoc, for MCX gold, support is around ₹1.60– ₹1.61 lakh, while ₹1.66 lakh and ₹1.70 lakh are the upside levels to watch.
Sood believes silver can continue to outperform gold, but volatility will remain much higher. On MCX, ₹2.40 lakh is an important support area, with ₹2.50 lakh and ₹2.60 lakh the next upside levels, said Sood.
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