Gold Price Forecast

Today’s outlook for gold prices suggests that they may remain within a certain range for now, with experts anticipating limited downside potential. Praveen Singh, a senior analyst at Mirae Asset Sharekhan, shares insights on what investors should be keeping an eye on.

Gold Performance

• During the week ending August 15, spot gold fluctuated between $3,405 (August 11) and $3,329 (August 14), ultimately decreasing by 1.76% over the week.
• By August 18, spot gold had dropped nearly 0.1%, closing at $3,331 as investors closely monitored significant U.S. conferences amidst the ongoing conflict in Ukraine.

Geopolitical Events

• A meeting took place in the Oval Office between Trump and Zelensky, focusing on security assurances for Ukraine. Following this, Trump met with several European leaders, who called for a ceasefire as a preliminary move toward establishing lasting peace in Ukraine. There are plans for a trilateral meeting involving Ukraine, Russia, and the U.S., with reports indicating that the Kremlin is open to this discussion, although no date has been set yet. Secretary of State Marco Rubio will collaborate with allies on security guarantees for Ukraine.

US Dollar Index and Yields

• For the week ending August 15, the US dollar index ranged between 97.62 (August 13) and 99.32 (August 11), closing at 97.85—marking a weekly decline of 0.30%. Current observations show the index at 98.20, reflecting a slight daily increase of approximately 0.03% as anticipation builds around the U.S. FOMC meeting.
• Two-year yields decreased by 1 basis point to 3.75%, while the 10-year yield rose by 3 basis points to 4.32%.

Market Insights

• Weekly CFTC data reveals a reduction in bullish gold positions, with money managers lowering their net positions to 154,226 as of August 12.

Federal Reserve Observations

• Fed’s Bostic, after a recent tour of the southeastern U.S., noted real concerns regarding tariffs, with high borrowing costs affecting business profits; he seems to favor a reduction in rates.

Hong Kong’s Gold Trading Plans

• The Hong Kong Treasury Secretary announced plans to establish an international gold trading hub supporting physical delivery, promoting a larger ecosystem for commodity trading.

Data Summary

• The NAHB Housing Market Index for August was released on Monday, landing at 32, slightly below the predicted 34.

Upcoming Events

• The Investor Jackson Hole Symposium is slated for August 21-23.
• ECB’s Lagarde is scheduled to speak at the symposium on August 23.
• This week’s U.S. data releases include housing starts (August 19), FOMC minutes (August 20), and several economic indicators on August 21.
• China’s PBOC is expected to maintain its loan prime rates at 3% and 3.5% on August 20.
• The Eurozone PMI and Germany’s final 2Q GDP figures are set for release on August 21 and 22, respectively.
• Japan’s PMI and national CPI will also be published on August 21 and 22.

Gold ETF Trends

• Despite a 1.8% drop in gold prices, global Gold ETF holdings reached a new high of 92.66 million ounces by August 15, reflecting an 11.84% year-to-date increase. The record for ETF holdings was 111.25 million ounces on October 15, 2020, driven by demand for safe havens during economic and monetary stimuli.

US Dollar and Indian Rupee Insights

• The US dollar fell as Trump eased his tariff threats, and proposed GST changes by the Indian government aim to lessen tariff impacts. These changes are set to reduce tax categories from four to two, adjusting rates on various products.

Overall Gold Outlook

• In the near term, investor focus is sharply on geopolitical developments related to Ukraine and the Jackson Hole Symposium. The meeting of European leaders with Trump added momentum to Ukraine’s position. A potential trilateral conference may ease geopolitical tensions, but the security guarantees remain complex, especially given Russia’s stringent conditions for a ceasefire relating to the Donbas region. Ukraine asserts that it won’t yield this territory.
• In the very short term, gold might test support levels around $3,307 (MCX Gold October Rs 98,600) or $3,290 (Rs 98,100). Significant long-term positive changes in the Ukraine situation could affect projections and mitigate declines in gold prices, although any resistance is observed at $3,350 (Rs 100,000) or $3,375 (Rs 100,700).