- Gold and silver prices are expected to remain volatile amid US labour data and Fed rate expectations
- Gold futures on MCX fell over Rs 6,000 per 10 grams last week, marking a 3.8% decline
- Silver futures declined 4% last week but gained around 21% in August, outperforming gold
Gold and silver prices are expected to remain volatile as markets enter September, with investors closely tracking US labour-market data, Federal Reserve rate expectations and geopolitical developments involving Iran.
The outlook follows a sharp correction in bullion prices last week, with gold futures on the Multi Commodity Exchange falling by more than Rs 6,000 per 10 grams.
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Investors are now assessing whether the decline marks a temporary bout of profit booking or the beginning of a deeper correction.
Market participants will track manufacturing and services PMI readings from major economies, including India, along with inflation data from the Eurozone and Germany. However, the key trigger is expected to be the US non-farm payrolls report due later in the week.
"The coming week is likely to remain highly volatile, with market participants attempting to price in the probability of a September Federal Reserve policy change," said Jateen Trivedi, research analyst at LKP Securities.
On the MCX, gold futures for October delivery fell Rs 6,157, or 3.8 per cent, last week to close at Rs 1.56 lakh per 10 grams. Silver futures for September delivery declined Rs 9,893, or 4 per cent, to Rs 2.36 lakh per kg.
Gold had fallen from around Rs 1.63 lakh to Rs 1.56 lakh per 10 grams during the week, marking a decline of more than Rs 6,000 from its weekly peak and a weekly fall of over 3 per cent, Trivedi said.
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According to Pranav Mer, senior vice president, EBG - commodity & currency research at JM Financial Services, selling pressure intensified on Friday after Federal Reserve Chair Kevin Warsh's remarks on inflation and monetary policy prompted investors to book profits across bullion markets.
Internationally, Comex gold futures for December delivery fell USD 150.7, or 3.2 per cent, last week to settle at USD 4,680.6 an ounce. Silver futures declined USD 2.56 or 3.64 per cent, to USD 67.78 an ounce.
Looking ahead, investors will closely monitor US non-farm payrolls, unemployment figures and ADP employment data.
The readings could influence expectations around the Federal Reserve's policy decision at its September meeting.Geopolitical risks could further amplify price swings.
Traders will watch developments surrounding the US-Iran conflict, while any disruption or escalation around the Strait of Hormuz could have implications for crude oil prices, inflation expectations and, consequently, monetary policy.
Despite the recent correction, silver remained the stronger performer in August. It gained around 21 per cent during the month, compared with a 15.7 per cent rise in gold, Gaurav Garg, Head of Research at Lemonn Markets Desk, said.
"The combination of dollar movement, labour-market data, Fed expectations and geopolitical headlines is likely to determine whether gold stabilises after the recent correction or enters another phase of profit booking," Trivedi said.
(With PTI inputs)
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