Last week, data releases in the US painted a mixed picture of the economy, making investors run hither and thither. Gold made a spectacular rally in the first four trading sessions of the week, touching a high of $1,191/ounce on Thursday, but later lost steam to close the week at $1,177/ounce, up only 1.8 per cent.

The Federal Reserve is closely tracking inflation and labour market data, but these data points are lately not leading to a cohesive picture on the economy. So, bullion investors have continued to obsess over the billion-dollar question on whether the Fed hikes its rate before the end of this year. The central bank’s next meeting is during October 27-28.

With gold on an uptrend, silver was up 1.3 per cent and closed at $16.05/ounce. Platinum bounced back sharply and closed at $1,015/ounce, up 3 per cent. The US dollar index closed marginally down at 94.54.

More jobs or fewer jobs? The two pieces of data that caused gold prices to gyrate were jobs and inflation data. On Thursday, data showed that the number of Americans filing for jobless claims declined in the week ending October 10 to the lowest in more than 40 years. Initial unemployment claims declined by 7,000 to 2,55,000. Forecasters expected at least 2,70,000 applications. This shows the labour market to be improving, but data on job growth painted a different picture altogether.

Earlier this month, data showed that US non-farm payrolls increased by 1,42,000 in August; in July the increase was 1,36,000, both down from a three-month average of 2,42,000.

Wage growth has also been stagnant for months. This data counters the view that the job numbers are good enough for the Fed to hike rates.

Inflation data is even more critical for gold. US CPI data released on Thursday last week showed that the US consumer price index dropped 0.2 per cent in September from the previous month, the second month of decline. This kindled deflation fears. However, core inflation saw an increase of 0.2 per cent month-on-month.

Given that it is becoming highly difficult to use data to decipher if rates will go up this year, bullion markets may be very volatile in the run-up to the upcoming Fed meet. On Tuesday, the housing starts data will be out followed by jobless claims number and existing home sales data on Thursday. On Friday, the flash PMI manufacturing data for October will be released.

The Purchasing Manager’s Index flash has been showing a slowdown in manufacturing in recent months. So, this week, the data will be keenly watched for changes.

Gold, silver outlook Gold prices may again try to make a stride towards the $1,200 levels this week, but cues from the above data will be crucial. There is a resistance near $1,190/ounce levels which may act as a barrier but if this is crossed, there may be more gains in the offing.

In India, gold and silver futures made gains tracking international prices. The rupee ended at 64.81 against the US dollar, at the levels of the previous week.

MCX Gold ended at ₹27,150, up 2 per cent. MCX Silver ended at ₹37,387, up 1.5 per cent.

This week, MCX Gold may move in the range between ₹26,500 and ₹27,500. MCX Silver has resistance at ₹37,800 levels. Unless this is crossed, the contract may end up only lower.

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