Gold prices eased on November 2 as a firmer dollar made bullion less appealing for holders of other currencies, while investors eyed a pivotal US Federal Reserve policy meeting amid growing concerns over a sustained bout of inflation.
Gold and silver prices rebounded after a fall on November 1 amid profit- taking in the dollar index. Both precious metals settled on a positive note in the international markets.
We expect both metals to remain volatile ahead of the Federal Reserve meetings. Gold has support at $1,784-1,772 and resistance at $1,804-1,818, while silver has support at $23.88-23.55 and resistance at $24.30-24.58.
Today is Dhanteras, an auspicious day for Hindus who usually purchase gold or silver in the form of jewellery and utensils. This year, a surge in the sale of gold and silver jewellery is expected. To lure customers, jewellers have lined up offers as well as discounts.
Gold Price Forecast: XAU/USD hovers around $1,800 with eyes on India, Fed
Gold (XAU/USD) remains lackluster below $1,800, easing to $1,793 ahead of Tuesday’s European session.
In doing so, the yellow metal lacks momentum strength to stretch the previous day’s rebound amid the traders’ indecision before US Federal Reserve (Fed) meeting, up for Wednesday.
Also keeping the gold prices challenged is the ongoing festive season in India, the world’s biggest bullion buyer, in contrast to economic hardships in another major gold buyer namely China. Given the recent improvement in Indian fundamentals and the Reserve Bank of India’s (RBI) refrain from monetary policy tightening, New Delhi’s gold demand may recover from the previous year’s disappointment. “India's gold demand could strengthen significantly in the fourth quarter (Q4),” per the World Gold Council’s (WGC) latest report cited by Reuters.
Elsewhere, China’s Ministry of Commerce urged the authorities to have a good stock of food ahead of winter, raising fears amid the power-cut problems and Evergrande-led economic woes.
Technical analysis:
Gold remains supported by a two-day-old ascending trend line and 200-EMA amid a firmer RSI line. The same hints at the quote’s further advances towards a weekly resistance line near the $1,800 threshold.
However, any further upside will have multiple hurdle around $1,810 and October’s peak near $1,813 before directing the bulls towards the key $1,834 resistance level, comprising tops marked during July and September.
On the contrary, a clear downside break of 200-EMA level surrounding $1,789 should recall the gold sellers targeting Friday’s bottom surrounding $1,772.
In a case where the gold bears keep reins past $1,772, the late October’s swing low near $1,760 should return to the charts.
· Aussie slides as RBA affirms dovish stance; Fed in focus
Australia’s dollar weakened on Tuesday after the country’s central bank dampened investor hopes for a hawkish pivot, kicking off a big week for monetary policy that includes decisions from the Federal Reserve and Bank of England.
The Aussie dipped as much as 0.47% before trading 0.23% lower at $0.75025. Last week, it was as high as $0.75555, a level not seen since July 6, as stubborn inflation fuelled bets the Reserve Bank of Australia could raise the key rate as early as next year.
The central bank stressed that inflation was still too low, although it also omitted its previous projection that rates were unlikely to rise until 2024 and dropped a key target for the April 2024 government bond.
The dollar index, which gauges the greenback against a basket of six major peers, was almost flat at 93.925, nursing a 0.25% loss from Monday when it retreated from a 2 1/2-week high of 94.313.
Sterling was on the back foot, slipping 0.07% to $1.3649.
The euro also edged 0.07% lower to $1.15995.
The dollar weakened 0.07% to 113.915 yen, continuing to consolidate below an almost four-year peak of 114.695 reached on Oct. 20.
· Yuan slips against dollar ahead of expected Fed tapering
Tighter U.S. monetary policy threatens to weaken the currency of China, which is unlikely to follow the Fed in any change in settings, but many see the spillover effect of a stronger greenback manageable.
The yuan opened at 6.3960 per dollar and was changing hands at 6.3988 at midday, slightly weaker than the previous late session close, despite a firmer midpoint set by the People's Bank of China at the open.
· Following the release of the data, futures on the Fed Funds rate, which track short-term rate expectations, priced in a 90% chance of quarter-point tightening by June 2022, factoring in another rate increase by December.
· China urges families to keep stocks of daily necessities ahead of winter
The Chinese government has told families to keep daily necessities in stock in case of emergencies, after COVID-19 outbreaks and unusually heavy rains that caused a surge in vegetable prices raised concerns about supply shortages.
· COVID-19 restrictions in Sydney to ease weeks ahead of schedule
· S.Korea inflation hits near decade-high, raising rate hike bets
South Korea’s consumer inflation accelerated to a near 10-year peak in October, forcing the central bank to revise up its 2021 price projections and reinforcing the case for another interest rate hike this year.
· Australia's central bank opens door to earlier rate rise, pledges patience
· The Fed begins a two-day meeting later on Tuesday, where it is expected to announce tapering of its asset purchases, and the BOE meets on Thursday with markets all but pricing in a small rate hike.
· Exclusive-No rush of job-seekers after end of UK furlough, survey shows
· Australian prime minister attacks French president’s credibility over scrapped submarine deal
· Oil prices steady on slow OPEC output increase
Oil prices were steady on Tuesday as key producer group OPEC undershot its expected pace of output increases last month, while the world’s top oil consumer China ramped up operating rates to meet a spike in diesel demand.
Brent crude futures edged higher by 3 cents to $84.74 a barrel by 0507 GMT, while U.S. West Texas Intermediate (WTI) crude futures slipped by 7 cents, or 0.1%, to $83.98 a barrel.
Reference: Money Control, FXStreet, CNBC, Reuters
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