Gold stays strong on US fiscal worries!

 

Worries about growing deficits & piled-up debt 

According to the Augmont Bullion Gold stays strong around $3300 on US fiscal worries! Amidst persistent concerns about the growing U.S. deficit, gold is still trading at about $3300 thanks to the dollar's decline, which usually increases the precious metal's allure as a safe-haven. The Congressional Budget Office estimates the recently enacted US tax bill, which is now headed to the Senate, will cost close to $4 trillion, escalating concerns about long-term fiscal instability. 

These worries about growing deficits and increased debt servicing costs are highlighted by Moody's recent lowering of the US credit rating. Gold also benefited earlier this week from heightened geopolitical tensions following allegations that Israel would attack Iranian nuclear sites, which sparked concerns of a wider Middle East conflict.

By highlighting Technical Triggers, Augmont Bullion said, gold prices are expected to trade in the range of $3275 (~Rs 95000) and $3375(~Rs 96400) in the near term. Either side breakout or breakdown will give 2-3% movement. As suggested May 23, Silver prices won't sustain above $34. We saw reversal and profit booking at those levels. Consolidation in this range of $32.5(~Rs 96000) and $34(~Rs 99000) would continue in the near term.  

On the other hand, Colin Shah, MD, Kama Jewelry submitted on Gold-Silver Weekly Performance and Outlook,

"The performance of bullion was volatile during this week owing to continuous fluctuations in prices. In case of gold prices in the international markets, there was a significant uptick during the week, rising approximately 3% to reach USD 3,303.92/Oz as of early Friday. This can be attributed to weakening dollar which saw depreciation of over 1% this week, followed by growing investor concerns regarding the fiscal outlook of the US.   

Domestically, gold price surpassed INR 96,000/10gms and remain range-bound between INR 93,000/10 gm to INR 96,000/10gms during the week. This was owing to the ripple effects of the international factors at play that fueled gold prices in the domestic market.   

Silver, on the other hand, saw 0.1% increase with prices hovering at USD 33.12/Oz in international market. Domestically, silver prices stood at INR 98,000/kg. This can be attributed to the cautious investor sentiments followed by global commodity trends and price movements.   

Moving forward to next week, the outlook for gold remains bullish with a possibility for a potential short-term correction. International Prices are expected to trade in the range of USD 3300-3400/Oz, supported by ongoing geopolitical tensions and uncertain outlook over US fiscal policies signaling economic instability in the biggest economy of the world. Domestic Prices can hover in the range of INR 95,000-96,000/10gms. For silver, prices may remain relatively stable, unless any major economic development takes precedence.”