Gold is expected to range trade in the run up to the US inflation data.
Gold price prediction today: Gold prices are expected to remain range-bound for the coming days, says Praveen Singh, Head Currencies and Commodities, Mirae Asset ShareKhan.
Gold Performance:
- On September 7, spot gold traded with a slightly bearish tilt as rise in oil prices and strong US nonfarm payroll report released on September 4 outweighed the impact of a retreat in the US Dollar Index.
- Earlier, in the week ending September 4, spot gold closed with a weekly loss of nearly 0.55% at $4430 as traders priced in an increased probability of a rate hike on encouraging monthly US job reports.
- At the time of writing this article on the night of September 7, the yellow metal was trading with a daily loss of ~0.35% at $4414.
Data roundup:
- No US data were released on September 7 as the US observed a Labour Day Holiday.
- In its final reading, the Eurozone’s 2Q GDP grew 0.6% QoQ, vs the estimate of 0.4%, as Ireland’s economic output surged.
- US nonfarm payroll report for August released on September 4, turned out to be a solid report as US employers added 162K jobs, Vs the forecast of 55K, while prior month’s data was revised higher from -23K in July to 21K. Three-month average job additions were revised higher from 38K to 71K. Manufacturing jobs increased by 16K, Vs the estimate of 5K. The unemployment rate was steady at 4.1%. Labour force participation rate edged higher from 61.5% in July to 61.6%– first improvement in almost a year. Average weekly hours all employees increased from 34.30 to 34.4, adding millions of productive hours, which can support consumer spending. On the flip side, average hourly earnings rose 0.3% from July and 3.1% from a year earlier, the slowest since 2021. The underemployment rate fell to 7.7% — the lowest since June 2025.
- Gold slumped in the wake of the nonfarm payroll report; however, it cut its losses as the US President Trump, through a social media post, nudged the Fed Chair Warsh cut rates. He also threatened to cut trade ties with nations running trade surplus with the US if the Fed does not lower rates.
- US ISM services rose from 54.1 in July to 55.40 in August – quickest since February. The trade deficit surged from $71.20 billion in June to $90.20 billion in July (forecast -$90.2 billion). ISM manufacturing expanded for the eighth straight month, while trade balance in August recorded the largest deficit since March 2025.
Geopolitics and oil:
- Crude oil prices rose Monday as traders assessed the risk to supply due to US-Iran conflict. The two countries exchanged tanker strikes over the weekend, which supported oil prices.
- On September 7, Iran said the Hormuz deal with Oman is imminent. The agreement, which Iran and Oman have been negotiating for weeks, will include details on a temporary safe route through the crucial transit point for energy supplies, according to Ismail Baghaei, the spokesperson for Iran’s Foreign Ministry.
- Iran and Oman intend to formalize control of the Strait, and are likely to impose service fees, which may create friction with the US.
- The US, blockading Iranian ports to prevent oil exports from Iran, wants the waterway to revert to its pre-war status of being free to use.
- The US admitted that a nuclear deal with Iran may never happen.
- At the time of writing this article, near-month Brent oil futures were trading with an intra-day gain of 1% at $97.21.
- Dated Brent oil closed at $100.65 on September 4.
ETF and COMEX inventory:
- Total known global gold ETF holdings fell for the first time in four days on September 4. Holdings have surged quite sharply from the cycle low of 96.16 Moz observed on July 20. To put it in perspective, since that cycle low, net inflows have risen 102 tons. Consequently, ETF holdings are up 0.49 Moz YTD, which amounts to a net inflow of 15.10 tons this year, though, overall, the level is still down 46 tons from the cycle peak seen just before the start of the Iran war on February 28.
- Registered COMEX inventories at 15.11 Moz are up 6.4% from the cycle low noted on August 7 but are down ~38% from the record peak of 24.25 Moz seen in April 2025.
China extends its gold buying spree:
- China added the most gold to its reserves since 2023 in August, as its official gold holdings rose by 650,000 ounces (~21 tons). The purchase has extended the PBOC’s buying streak to 22 months.
Dollar Index and yields:
- The US Dollar Index, notwithstanding a strong nonfarm payroll report, fell on September 7 as the Japanese Yen rallied to the highest in six months. The Bank of Japan will announce its monetary policy on September 18. It is widely expected that the Central bank will hike its key interest rates to support currency amid elevated inflation and surging yields.
- There is a possibility that the bank may go for outsized hikes/more hikes later. Better-than-expected Eurozone’s GDP data and expectations that the ECB will hike rates also weighed on the greenback.
- At the time of writing this article, the US Dollar Index was hovering around 98.87, down 0.3% for the day.
- US bond markets were closed on September 7, so there was no clue from yields.
CFTC positioning:
- Money managers decreased their bullish gold bets by 10,504 net-long positions to 140,811, the least bullish in four weeks, according to weekly CFTC data on futures and options. Long-only positions fell 10,841 lots to 152,376 in the week ending Sept. 1, the lowest in three weeks. Short-only positions fell 337 lots to 11,565 lots.
Upcoming data:
- Major US data on deck in near term include NY Fed August one-year inflation expectations (September 8), August PPI (September 10) and August CPI (September 11).
- China’s trade balance (September 8) and inflation data (September 9) will also draw traders’ attention.
Upcoming event:
- The ECB will announce its monetary policy on September 10 wherein It is widely expected to hike the benchmark rate by 25-bps, its second interest rate hike in this cycle.
Gold Price Outlook :
- Gold would have slumped hard on strong US nonfarm payroll report and the Fed Chair Warsh’s hawkish speech at Jackson Hole Symposium; however, dovish commentaries by the NY Fed President Williams and the Fed Governor Waller in the first week of September along with intense pressure from the US President to cut interest rates despite elevated inflation have helped the shiny metal cushion its losses so far.
- Traders will closely watch oil prices and the upcoming US CPI data as disinflationary data may make the Federal Reserve hold rates in September as some officials suggest that ‘wait-and-watch’ approach will be prudent.
- Gold is expected to range trade in the run up to the US inflation data.
- A divided Fed spells uncertain outlook in near term, though hotter-than-expected inflation or significantly cooler-than-expected may briefly resolve the standoff between bulls and bears. Support is at $4350/$4280/$4200-$4220, while resistance is seen at $4530/$4600/$4670.
(Disclaimer: Recommendations and views on the stock market, or any other asset classes or personal finance management tips given by experts and analysts are their own. These opinions do not represent the views of The Times of India.)
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