Gold rate today: Yellow metal to trade range-bound; check strategy here

Gold Rate Today: Gold is well supported on the US deficit concerns as the US deficit is likely to increase irrespective of the US presidential election results

Gold recovers along with the US bonds

 

Gold Performance:

 

Spot gold, after falling over 1 per cent on Wednesday due to lack of any concrete Brics details on its proposed alternate payment system, was up around 0.75 per cent on the day as it was changing hands at $2,735 when the MCX closed. The MCX Gold December contract at Rs 78,340 was up 0.68 per cent.

 

Gold's gain on Thursday came on weaker Dollar and easing US yields as bonds, notwithstanding stronger than expected US data, corrected a bit higher after a huge sell-off.   

 

Data roundup:

 

The US data released Thursday were largely encouraging as the data topped their respective forecasts: initial jobless claims 242K (forecast 227K); S&P global US manufacturing PMI (October prel.) 47.80 (forecast 47.50); S&P services PMI 55.30 (forecast 55); Composite PMI at 54.3 (forecast 53.80); and new home sales (September) at 738K (forecast 720K).

 

Upcoming data:

 

Today's US data include durable goods orders (Sept. prel.), University of Michigan sentiment (Oct. final) and University of Michigan inflation expectations. PMIs out of Europe were largely mixed.

 

Gold ETF:

 

Total known global ETF holdings swelled to 84.143Moz on October 23- the cyle-high and the highest level since January 25.

 

Brics summit 2024:

 

At the Kazan Summit, Brics members came out with a join declaration encouraging the strengthening of correspondent banking networks within Brics and enabling settlements in local currencies, in-line with Brics Cross-Border Payment Initiative (BCBPI). Russia argued for integrating the depositories of member states under a Brics Clear Umbrella to ensure uninterrupted cross-border securities transactions as an alternative to the Euroclear and ClearStream systems, though reportedly only few members seem to be interested in joining a common depository presently. Central bank officials from Brics nations plan to discuss the unified payment system in December.

 

IMF Managing Director Georgieva said the Fund wanted additional information about the proposed payments system to assess how it may translate into reality.

 

US Dollar Index and yields:

 

The US Dollar Index retreated from the cycle high of 104.435 to 104.05 and was down around 0.4 per cent on the day as the US yields eased. The 2-year and 10-year yields were down over 1 per cent as the bond sell-off took a technical breather.

 

Outlook:

 

Gold is well supported on the US deficit concerns as the US deficit is likely to increase irrespective of the US presidential election results. In addition, geopolitical concerns due to expected rise in the US deficit also lend support to the yellow metal. However, the US yields may recover soon on encouraging US data, which would make gold vulnerable.

 

Gold is expected to consolidate its gains and may range trade in the near-term before it tests the crucial resistance at $2,800 (Rs 80,000).

 

Support is at $2,700 (Rs 77,400)/Rs $2,685 (Rs 76,900). Resistance is at $2760 Rs 79,000). Buying the dips is the preferred strategy.

 

=====================  Disclaimer: Praveen Singh – Associate VP, Fundamental Currencies and Commodities, Sharekhan by BNP Paribas. Views expressed are his own.