Excerpts:
Q. Gold and silver settled on a bit of a positive note last week. The overall trend seemed to be positive. How was last week for commodities in general?
Naveen Mathur:
Gold and silver closed higher on a weekly basis but erased some gains on Friday due to a weaker jobs report, prompting investors to cover losses from the global equities sell-off. This was also influenced by the unwinding of carry trades as the Japanese yen appreciated sharply against the dollar following Japan’s interest rate hike. Geopolitical tensions in the Middle East further supported prices, with heightened risk aversion in Asia after US Secretary of State Tony Blinken warned of a potential attack by Iran and Hezbollah against Israel. Additionally, dovish Federal Reserve expectations and declining US Treasury bond yields weighed on the greenback, supporting gold.
Q. What is the outlook for precious metals such as gold and silver?
Naveen Mathur:
Traders may turn cautious as the week progresses and may refrain from placing outright bets on the precious metal amid sell-off in global equities since Friday may keep investors to cover their losses from the precious metals complex.
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Q. Any data that will be in focus this week?
Naveen Mathur:
Services PMI data from global economies remain in focus this week which is expected to show slight improvement. Traders should also closely monitor the developments in the Middle East as Iran’s response is awaited after ISRAEL killed the HAMAS leader last week. The yen carry trade unwinding which gained focus since last week may continue this week as the yen appreciated sharply after the Bank of Japan raised interest rates and reduced bond purchases.
Q. What can traders expect this week?
Naveen Mathur:
Signs of persistent slowdown in China’s economy could weigh on sentiments for Silver too as data last week showed China’s manufacturing activity in July shrank for the first time in nine months as new orders declined, boding ill for the country’s growth momentum in the second half of 2024. Clarity to emerge on the geopolitical front this week amid global equities may stabilize by the end of the week while we remain positive for Gold for medium to long-term scenarios amid slowdown fears to augment safe haven appeal in precious metals.
Q. Levels to watch out for?
Sure. Below are the levels that can be looked at. The outlook is sell on rise.
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