Bullion may shine next week as traders await US inflation data, Fed signals

Gold and silver prices are anticipated to remain strong next week, though profit-taking at elevated levels might curb the rally, according to experts. Traders monitoring precious metals will keep a close eye on US inflation and economic data, as well as the Federal Reserve's signals. Inflation data, such as the US Core Personal Consumption Expenditures (PCE) and GDP figures, will be the key drivers for gold and silver prices.

The upcoming Jackson Hole symposium, set for August 27-29, will also be closely watched, with Federal Reserve Chair Kevin Warsh delivering his first keynote address at the event.

Pranav Mer, Senior Vice President at JM Financial Services, expects a positive overall sentiment, although some profit-taking cannot be ruled out. West Asia developments, especially the US-Iran peace process and the potential reopening of the Strait of Hormuz, will also be under scrutiny. Gold has jumped over 5% on MCX, with futures for October delivery gaining ₹7,932, or 5.13%, and closing at around ₹1.62 lakh per 10 grams.

Silver futures for September delivery have surged ₹10,673, or 4.52%, settling at around ₹2.46 lakh per kg.

Jateen Trivedi, VP Research Analyst at LKP Securities, attributed the gold price rise to renewed buying interest, lower bond yields, and improving liquidity conditions. Gold prices reached a 3-month high of ₹1.62 lakh per 10 grams internationally, while global bullion prices surged with the Comex gold futures for December delivery gaining $243.3, or 5.5%, to $4,680.6 per ounce, and September silver futures jumping $4.42, or nearly 7%, to $69.53 per ounce in New York.

Analysts believe that the sharp mid-week rally was bolstered by the US Treasury Department's liquidity measures involving increased buybacks of longer-dated bonds. Future inflation numbers, Fed commentary, and geopolitical events will determine if bullion can sustain its recent gains.