Gold rate today: Yellow metal in 'overbought' zone, eyes $2800 in near-term

Gold prices today: Spot gold hit a fresh record high of $2,773.53 on October 29, 2024. Buying the dips is the preferred strategy

Gold prices at fresh record highs as US job data disappoints

 

Gold prices:

 

Spot gold hit a fresh record high of $2,773.53 on October 29, 2024, as the metal continued to trade firm on the US fiscal deficit concerns, geopolitical worries and uncertainty over the US presidential election outcome. It surged further on disappointing US JOLTs openings data.

 

The yellow metal was changing hands at $2,770, up around 1 per cent when the MCX closed. The MCX December gold contract at Rs 79,268 (LTP) was up 0.89 per cent.

 

US yields and the Dollar Index:

 

The US ten-year yields were highly volatile as the yields surged to 4.34 per cent, the highest level since July and a fresh cycle high, before falling to 4.28 per cent. The two-year yields, which closed at 4.12 per cent (the highest since August 1), slid nearly 1 per cent from the top. The US Dollar Index rallied to 104.64, the highest level since February.

 

 

Gold ETF holdings:

 

Total known global gold ETF holdings edged lower to 84MOz on October 28 from 84.105 MOz seen at the end of the last week. Nonetheless, the holdings are at the highest level since January.

 

Data round-up:

 

The US data were largely mixed. Major focus, however, was on JOLTs job openings (September), which, at 7,443K, fell well short of forecast of 8,000K as even the prior month data was revised lower from 8040K to 7861K. The dismal job data boosted the precious metals further.

 

Conference Board Consumer Confidence surged to 108.70 vs the forecast of 99.50, the highest level since March 2020 as consumers felt more confident about broader economy and labour market conditions. Even the prior data was revised higher. FHFA House Price Index (August) came in at 0.30 per cent (forecast 0.10 per cent).

 

Upcoming data:

 

Today's major US data on tap include ADP employment change (October), Q3-CY24 advanced GDP, personal consumption (Q3 advance) and pending home sales (September). The US GDP data is likely to be a robust one consumer spending, though it is likely to cool down going ahead.

 

This week is crucial as we have got US nonfarm payroll (October), US ISM manufacturing and US PCE inflation (September) data ahead in the week. In addition, China's manufacturing and non-manufacturing will also be released on October 31.

 

Out of the Euro-zone, focus will be on CPI, GDP, employment data of the Euro-zone and Germany.

 

Gold demand trends:

 

China's January-September gold consumption is down 11.20 per cent year-on-year (Y-o-Y) as high prices take a toll on the Chinese demand, though domestic Chinese gold ETF holdings in the first three quarters rose to 91.39 tons at a growth rate of 48.69 per cent Y-o-Y. Shanghai gold discount was noted at -$24.94.

 

India’s RBI said that it added another 32 tonnes of gold reserves in the six-month period to take the overall tonnage to 854.73 tons, up from 822.10 tons at the end of the previous financial year.

 

Gold price outlook:

 

Weakening Chinese gold demand and somewhat contained geopolitical tensions are negative for the metal. Traditional drivers of the metal which include yields, Dollar Index, etc are not supportive either. However, presently, the markets are concerned about the likelihood of further rise in the US deficit in the wake of the US presidential elections. The outcome uncertainty is boosting the allure of the metal. In addition, de-dollarisation factor continues to be in play, though the latest Brics announcements lack details. India’s festive season demand is also positive for the metal as buyers are reportedly undeterred by record high prices.

 

Overall, gold is expected to be volatile and choppy. However, although somewhat overbought, the metal is ignoring elevated US yields and the surging US Dollar; thus, buying the dips is the preferred strategy. The near-term target is $2800 (Rs 80,100)/$2850 (Rs 81,500). Support is at $2750 (Rs 78,600)/$2715 (Rs 77,700).  ===========  Disclaimer: Praveen Singh – Associate VP, Fundamental Currencies and Commodities, Sharekhan by BNP Paribas. Views expressed are his own.