August 18, 2023 / 08:57 AM IST
Sensex Today | Mohammed Imran, Research Analyst at Sharekhan by BNP Paribas:
The yellow metal is reeling under the surging US treasury yields over interest rate hike expectations in the following FOMCs as the US economy continues to remain resilient with strong consumer spending and tight labour market conditions, despite the interest rates remaining at 22 years high of 5.25%. The spot gold hit a five-month low of $1884 on Thursday on the back of strong US economic data. Gold is down 3.6% in August alone and has fallen close to 5% ytd.
The US treasury yields which have usually inverse relations to gold prices are surging across the tenure, the 30-year treasury yields hit 12 years high, and 10 years yields topped at 4.33% on Thursday, adding pressure on non-yielding gold investments.
The weekly jobless claimants fell to 239K last week, and the forward-looking indicator of the Philadelphia Fed Manufacturing Index (Aug) came in at 12. The dollar index has drawn support from a recent run of U.S. economic data reinforcing the view that interest rates will remain high for some time pushing the index to a fresh two-month high of 103.59 on Thursday, and we believe the dollar index will keep making gain in coming weeks on rate hike concerns.
Remain bearish on the gold outlook as prices are heading for further decline towards $1865/$1850 levels while resistance remains around $1910/1930. In the absence of any major economic data gold may have sideways movement for the day.