Weekly Outlook on Gold

COMEX Gold prices retreated from their record highs during Asian trading on Thursday as the recent rally in the precious metal began to cool. The market remains focused on the prospect of U.S. interest rate cuts, alongside growing fears of an impending recession.

Gold Prices Slip from Highs Amid Profit-Taking, Fed Rate Cut Speculation, and Recession Concerns

Earlier this week, gold surged to unprecedented levels, fueled by increasing confidence that the Federal Reserve would commence rate cuts by September. However, a combination of profit-taking and a stronger dollar prompted the metal's decline on Thursday.

Attention is now directed toward Fed Chair Jerome Powell’s upcoming address at the Jackson Hole Symposium on Friday, which is anticipated to provide further insight into the Fed’s monetary policy direction. Lower interest rates are typically favorable for gold, as they reduce the opportunity cost of holding non-yielding assets. This trend also provided a boost to other precious metals, though their gains were less significant than gold’s.

While expectations of rate cuts persist, concerns over a potential recession have been amplified by a sharp downward revision in U.S. payroll data for the year ending March 2024. Released on Wednesday, the data has heightened fears that a cooling labor market could tip the U.S. economy into recession.

Technically, COMEX gold may experience some short-term consolidation or pullbacks, the overall technical outlook remains bullish as long as key support levels of $2490 hold and market conditions continue to favor safe-haven assets.

Gold on the MCX is poised for further gains, with the next leg of the rally likely if global cues remain favorable and domestic demand picks up. On the daily scale, the 200-day moving average around Rs. 67900, serves as a major long-term support. If prices remain above this level, it indicates a strong uptrend. 

A breakout above Rs.72300 could see gold surge toward Rs.73500 & Rs.74700, in the near term, especially if the rupee weakens and global uncertainty persists.

Important Gold Price Levels: