07 November
Gold and silver market
The price of spot gold continues to face downward pressure, primarily attributed to the prevailing optimism in the financial markets. Investors are shifting their capital towards assets with higher risk appetites, causing the price of gold to trade around $1,970 per troy ounce during the Asian session on Tuesday.
One contributing factor to the reduced demand for gold is the resurgence of US Treasury yields. The 10-year US Treasury yield has rebounded from a six-week low observed on Friday and currently rests at 4.63%. This increase in yields has bolstered the strength of the US Dollar (USD), as indicated by the rebound of the US Dollar Index (DXY), which is now trading near 105.20.
However, there is a silver lining for bullion prices as investor sentiment improved with speculation suggesting that the US Federal Reserve (Fed) might slow down its monetary policy tightening. Lackluster employment data from the United States (US) has fueled this speculation. Additionally, the latest report from the World Gold Council (WGC) reveals that central banks around the world acquired a combined 337 metric tons of gold in Q3. Year-to-date, these banks have added an impressive 800 tons to their reserves. Notably, emerging markets have taken the lead among the largest buyers, signaling a continued trend of diversification away from the US dollar.
On the flip side, the contained conflict in the Middle East between Israel and Hamas has prompted outflows from non-yielding assets like gold.
In addition to these factors, traders are keeping a close eye on China’s Trade Balance data for October, scheduled to be released later in the day. It is anticipated to climb to $81.95 billion from the previous $77.71 billion. A Trade Surplus exceeding expectations could potentially boost the demand for gold.
As we analyzed yesterday, gold prices have encountered challenges in maintaining higher levels. This morning, they are trading in close proximity to a crucial support level at 1976.
Should the yellow metal breach the low from the day of the FED MEETING, which stands at 1969, we might observe a swift descent towards 1952.
For those considering gold purchases, exercising prudence is strongly advised, as there is a possibility of price depreciation on the horizon.
– Nitin Kedia
