Gold and silver prices today: Yellow metal inches higher after steep losses amid higher US yields and dollar index

Gold prices opened on the Multi Commodity Exchange (MCX) on Tuesday at Rs 59,550 per 10 grams and hit an intraday low of Rs 59,451. In the international market, prices hovered around $1,942.87 per troy ounce. Meanwhile, silver opened at Rs 72,280 per kg and hit an intraday low of Rs 72,196 on the MCX. The price hovered around $23.63 per troy ounce in the international market.

Gold finished the week ending August 4 with a loss of 0.75%. Ten-year US treasury yields gained 2.30%, while two-year yields were down 2.35%. The US dollar Index was up around 0.35% on the week.

Anuj Gupta, Head of Commodity & Currency, HDFC Securities, said, “Last week, gold increased by 0.17% and closed at 59527 levels while silver corrected by 2.13% and closed at 72478 levels. Safe-haven demand due to the downgrade of the US’s rating is supporting gold prices. However, the downgrade of China by Morgan Stanley is putting pressure on metals.”

Besides, analysts say, the increase in oil prices after top producers Saudi Arabia and Russia extended supply cuts through September, adding to undersupply concerns, was also aiding gold. Uncertainty and safe-haven demand will play a major role in gold’s further movement.

Gupta says technically gold has strong support at 59000 ($1920) and then 58500 ($1890) levels, while resistance at 59800 ($1960) and 60300 ($1980) levels. Traders can buy gold around 59000 levels with a stop-loss of 58500 levels for the next target of 59800 and then 60000 levels for this week."

“Silver support at 71000 ($22.50) and then 68000 ($21.50) levels while resistance at 74000 ($24.50) and then 76000 levels ($25.50). Technically, we expect it to recover and test 74000 levels very soon,” added Gupta.

Further, one must know that gold prices increased, recovering after steep losses in the past week amidst higher US yields and the dollar index. Data from the US in the previous week was reported in line with expectations, providing a lower impact on the market.

Manav Modi, Analyst, Commodity and Currency, MOFSL, said, “The unemployment rate and non-farm payroll data set off each other once again. Non-farm payroll was quite in line with the previous month. The economy added 187,000 new non-farm jobs, according to data released by the Bureau of Labor Statistics on Friday, compared with forecasts of 200,000.”

Unemployment was reported 0.1% lower than expectations at 3.5%, while the average hourly earnings were also higher, raising questions regarding wage growth.

Praveen Singh, Associate V.P., Fundamental Currencies and Commodities, Sharekhan by BNP Paribas, said, “Somewhat softer than expected U.S. nonfarm payroll report helped gold rebound Friday. The U.S. employers added 187K jobs in July as against the forecast of 200k jobs. The previous two months' figure was revised lower by 49k. The unemployment rate and earnings were encouraging. The unemployment rate in July edged lower to 3.50% from 3.60% in June and was better than the forecast of 3.60%. Average hourly earnings rose faster than expected in July. Average hourly earnings m-o-m rose by 0.40% Vs the forecast of 0.30%, while earnings on a y-o-y basis at 4.40% beat the forecast of 4.20%. It is to be noted that this year, jobs added, as shown by the monthly nonfarm payroll reports, have been revised continuously lower for the first half of the year.”

Overall, it was a decent job report. However, the US dollar slipped lower after the report as the yields dived lower. Two-year US yields fell 2.35% Friday to end at 4.768%, while 10-year yields sank 3.29% to close at 4.042% on the week's last trading day. Gold closed with a gain of 0.47% at $1942.90. The U.S. Dollar Index was down 0.44% as it closed at 102.01.

“The prospect of higher-for-longer US interest rates has weighed heavily on bullions in recent weeks. The Fitch downgrade triggered sharp increases in U.S. Treasury yields, which pressured non-yielding assets such as gold. Focus this week will be on the U.S. and India CPI, RBI interest rate decision, which could trigger volatility in the market,” said Modi.

Singh said, “This week, investors will focus on the US CPI inflation (July), PPI (July), and the University of Michigan consumer sentiment and inflation expectations (August preliminary). The U.K.'s monthly GDP (June) and 2Q (preliminary) data and Germany’s CPI will also be closely watched. China’s trade balance, CPI inflation, and new Yuan loans will also be released this week. Today’s data docket includes Germany’s industrial production, the Euro-zone’s Sentix investor confidence, and UK’s housing prices. Gold is expected to be range-bound. Support is at $1930/$1918. Resistance is at $1950/$1965/$1975. The outlook is bearish.”

Amit Khare, Associate Vice President at GCL Broking, said, "Bullions daily charts are trading at demand zone. Good upside movement is possible in near future. Momentum Indicator RSI also indicating the same. So traders are advised to make fresh buy positions in Gold and Silver near given support level one with the stop loss of support level two and book near given resistance levels: Gold October Support 59350/59100 and Resistance 59700/59900. Silver September Support 72000/71400 and Resistance 72700/73200."