Gold on MCX settled up 0.27% at 31075 as the dollar dropped, shrugging off earlier pressure by top Federal Reserve officials' comments fuelling speculation that U.S. interest rates would rise sooner rather than later. Speaking at a meeting of leading central bankers in Jackson Hole, Wyoming, Fed Chair Janet Yellen said on Friday that an improvement in the economy had boosted the case for another rate rise, while Vice Chair Stanley Fischer said the U.S. central bank was still on track to lift rates this year. U.S. consumer spending increased for a fourth straight month in July amid strong demand for automobiles, pointing to a pickup in economic growth that could pave the way for the Fed to raise interest rates this year.
Hedge funds and money managers increased their net long position in COMEX gold contracts in the week to Aug. 23, U.S. Commodity Futures Trading Commission data showed on Friday. Friday's nonfarm report for August, as well as other data, could reinforce hawkish messages from Yellen and other Fed officials. Employers are expected on Friday to show 180,000 job gains in August, below the better-than-expected 255,000 additions in July and 292,000 gains in June.
Odds for an interest rate hike from the Federal Reserve in the coming months spiked after Fed Chair Janet Yellen said Friday that the case for an increase was strengthening, while Vice Chairman Stanley Fischer indicated a tightening is possible at the next review in September. Technically market is under fresh buying as market has witnessed gain in open interest by 0.33% to settled at 8941 while prices up 85 rupee, now Gold is getting support at 30939 and below same could see a test of 30802 level, and resistance is now likely to be seen at 31153, a move above could see prices testing 31230.
--Gold trading range for the day is 30802-31230.
--Gold rebounded as dollar dropped, shrugging off earlier pressure by Fed’s comments fuelling speculation that U.S. interest rates would rise sooner rather than later.
--The case for raising U.S. interest rates has strengthened in recent months due to improvements in the labour market, Fed’s Yellen said.
--Fed's Stanley Fisher provided a more straightforward message as he acknowledged the strong labor market and inflation were moving towards Fed's target.
Courtesy: Kedia Commodities