Will gold prices consolidate or decline a bit this week? Check the triggers

Kolkata: According to data of Indian Bullion and Jewellers Association, the price of gold 999 has remained above the Rs 1,00,000/10 gm level for almost all days this month. The main drivers were the tariff-related tension introduced by US President Donald Trump. This week a few factors that can push the situation to a slight easing of tension could be at work.

This has led market analysts to predict a phase of consolidation. First, US President Donald Trump and Russian President Vladimir Putin had a high-profile meeting in Alaska that signaled a positive movement towards addressing the situation in Ukraine. If this week there are more positive movements towards a cessation of hostilities in Ukraine, it could pave the path for deeper geo-political implications. MCX gold futures for October contract went down by about 2% or Rs 1,648 per 10 grams last week.

Precious metal research analyst of Motilal Oswal Financial Services Manav Modi has told the media that gold prices has inched downwards since new geopolitical and economic developments have resulted in less safe-haven demand in the past few days. He has also said that the high prices have ensured that the demand for the metal remains sluggish in Asia, which is a high-demand market for the yellow metal.

Moreover, this week, some economic data will emerge from the US as well as the Eurozone. The data the markets will specifically watch out for pertain to housing data from the US, Consumer Price Index numbers from the UK and Euro zone. Data on manufacturing and services PMI will also flow in from economies. On Friday, US Fed chair Jerome Powell will make a speech at the Fed's annual Jackson Hole Economic Symposium, which will be keenly watched for indications.

There is another positive development at work. Last week, China and the US agreed to extend the tariff truce by 90 days in order to find an amicable settlement to the tariff war that erupted between the two of the world's biggest economies. In April-May the two countries slapped more than 100% tariffs against each other in a round of tit-for-tat that roiled the global markets.

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How the Fed thought process moves on the vexed issue of interest rate cut will also set the tone this week. While weak macroeconomic data raised the apprehension of a slowdown in the US, import price data a producers data have kept the possibility of inflation alive, creating contradictory pulls in the US Fed. Donald Trump insists on a Fed rate cut and treasury secretary Bessent has already hinted at 50 basis points cut though Fed chair Jerome Powell has resisted urges to cut rates and wants to take an objective view based on the economic data.

After Donald Trump said last week that gold imports into the US would not face tariffs, the precious metal prices dipped from Rs 1,02,000 to about Rs 1,00,000 (per 10 gms), pointed out analysts. On August 16, Comex gold futures for December contracts ended lower at $3,382.60 per ounce (in New York).