Gold rate today: US election, Brics, Mid East war may take gold to Rs 80200

Gold rate today: As gold prices are expected to be highly volatile, especially due to Brics headlines, buying the dips is the preferred strategy

Gold sharply up with focus on geopolitics and the US Presidential election outcome

Gold bulls once again ignored firmer US yields and rising US Dollar to bid up gold price as they continue to focus mainly on the uncertainty around the US Presidential election outcome, ongoing Brics summit in Russia, and geopolitics.

Spot gold, at the time of the MCX closing, was changing hands at $2,747 and was up nearly 1 per cent for the day. 

MCX December gold at Rs 78,684, was up 0.83 per cent.

The metal is up around 33 per cent year-to-date (YTD), which makes this year to be the strongest year for the metal since 1979 in which it surged 136 per cent.

 

US yields and the Dollar Index:

The ten-year yields rose to 4.22 per cent, highest since July 26, as bond traders fret over the possibility of a jump in the US fiscal deficit irrespective of the Presidential election outcome. The US Dollar Index at 104.03, the highest level since August 2, was up by 0.03 per cent.  

Gold ETF:

Total known global ETF holdings stood at 83.99 Moz as on October 21, higher than 83.833 Moz seen at the end of the last week and highest level since January 30.

Fedspeak:

Federal Reserve Bank of Kansas City President Jeffrey Schmid favours a slower pace of rate hike to sustain economic growth, stable prices and full employment. Federal Reserve Bank of Minneapolis President Kashkari reiterated that he favours reducing rates at a slower pace in coming quarters unless the labour market deteriorates more rapidly.

IMF forecasts:

IMF came out with its latest projections for the global economy on October 22. As per its latest projections, the global economy is expected to grow 3.20 per cent in 2025, down 0.10 per cent from its July projection as it sees global inflation slowing down to 4.30 per cent in 2025 from 5.80 per cent in 2024. 

The US economy is likely to grow slightly stronger at 2.80 per cent in 2024 and 2.20 per cent next year as it is close to achieving soft landing. However, it revised its forecast slightly for China's growth this year to 4.8 per cent from 5 per cent in July forecast on property market concerns.   

IMF, earlier in the week, warned that the global public debt is set to $100 trillion this year. The organisation also warned that trade tensions may shave off 0.50 per cent from the global GDP.

Data roundup:

Philadelphia Fed non-manufacturing activity in October rose to 6 (forecast 4.10) from -6.10 in September.

Upcoming data:

The major US data to be released on Wednesday include existing home sales (September), though the Thursday's data docket that includes weekly jobless claims, new home sales and S&P global US PMIs will be more important. The European PMI data will also be released on Thursday.

Gold Outlook:

Gold trading is being governed by concerns about the US fiscal deficit and tariffs leading to inflationary pressure. Apart from the US election related worries, geopolitical concerns emanating from the Middle East conflict are also keeping the yellow metal buoyant. IMF revising China's growth forecast lower and warning on trade tensions may also support it.

Gold is expected to trade with a positive bias in the near-term. As gold prices are expected to be highly volatile, especially due to Brics headlines, buying the dips is the preferred strategy. 

The metal is likely to rise to $2,800 in short-term. Support is at $2,700 (Rs 77,300)/$2685 (Rs 76,900). Resistance is at $2,800 (Rs 80,200). 

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Disclaimer: Praveen Singh is associate vice president of fundamental currencies and commodities at Sharekhan by BNP Paribas. Views expressed are his own.