Dhan Dhana Dhan Gold…
2017 has been a good year so far for Gold. In last nine and a half months, we have broadly seen a bullish trend except in the months of June & September. The yellow metal traded past $1350 or Rs 30400 to score new highs in early September BUT then bears dominated the rest of the month to bring the curtain down with an over three percent of losses on monthly basis. However, prices are trading within the impressive lead taken in the month of August which is the reason why we are still counting on the yellow metal over the possibility of the continuation of positive trend this Diwali.
Close Up View: Meanwhile, the biggest surprise came in the form of U.S payroll numbers on 6th October. The key non-farm employment data fell in the negative territory for the first time in last seven years. This should have immediately propelled bullion prices to new monthly highs BUT the fact that the disappointing payroll numbers were a result of major disruption brought by Hurricane Harvey & Irma in September; the market soon absorbed the news and went on the level playing field provided by a decade low unemployment rate. But all of the above paradoxes & facts failed to keep bullion prices under check, making the yellow metal emerge as a winner. Moreover, the winner is looking in no mood to retrace at least till the next U.S Fed meeting scheduled on 1st November. Actually, more than the meeting, it is the release of payroll numbers on 3rd November which data watchers are awaiting. But wait…there is one mega event even before November Fed meeting & payroll numbers…It is our very own Diwali which begins with the auspicious day of ‘Dhanteras’. Taking current sentiments and facts based situation into account, we are going to see Gold adding more glitter this Diwali. The upside targets for Gold are anywhere in the range between $1360-$1390 or Rs 31200-31800 for this Diwali. Quarterly targets may get an extension till $1440.
Long Shot View: If we look at perceptions regarding fate of the bullion prices in current quarter then a low unemployment rate at 4.2% is clearly the talk of the town. The magical number is the reason behind talks of a certain rate hike when the U.S Fed will hold the last meeting of 2017 on 14th December. This, coupled with a possible trend revival in Dollar Index may put pressure on Gold prices in quarter end. But that’s a story to be told later. For the moment…glitter like Gold, shine with happiness and enjoy the festivities.
Wishing you all a very Happy and Prosperous Diwali from team Arihant!