Bullion set to shine brighter if US jobs report confirms weakness

Bullion set to shine brighter?

Markets closed a volatile week (ended August 29) on a choppy note, as investors weighed persistent inflation risks, rising political pressure on the Federal Reserve, and growing expectations for a September rate cut.

The dollar started the week with a sharp rebound after a steep pullback the previous Friday, following Fed Chair Powell’s dovish shift at the Jackson Hole Symposium. The greenback surged to 98.7, supported further by stronger-than-expected US new home sales data for July. However, growing pressure on the Fed to cut rates, threats to the Fed’s independence as Trump called for the dismissal of Fed Governor Lisa Cook, and dovish commentary from Fed Governor Christopher Waller kept the dollar in a tight range.

On Friday, US PCE inflation data came in line with expectations, providing no hawkish surprise. This strengthened market confidence in a September rate cut, with odds rising above 87%. Still, the dollar remained resilient above 98, as core PCE climbed to 2.9% in July, its highest level since February, signaling persistent price pressures that could dampen expectations for further rate cuts.

The dollar later retreated below 98 and ended the week on a flat note, as markets closely watched a federal court hearing where Trump urged a judge to deny Cook’s appeal to remain on the Fed Board, though the hearing concluded without an immediate ruling.

This unprecedented legal challenge, coupled with renewed geopolitical tensions, led to a pullback in US equities and fueled a sharp rally in precious metals. COMEX gold surged above $3,518 per troy ounce, closing the week with a 3% gain, while silver soared above $40 per ounce for the first time since 2011. Safe-haven demand was driven by growing international tensions, as Britain, France, and Germany warned Iran of renewed UN sanctions over its nuclear activities. Meanwhile, France and Germany called for secondary sanctions on countries supporting Russia’s military efforts in Ukraine.

On the daily chart, MCX GOLD futures witnessed a sharp rally on Friday, confirming a breakout from the Ascending Triangle pattern. Prices are currently holding above the Supertrend (7,3) and the 20 EMA, reflecting a bullish bias. The uptrend is expected to extend into the coming week, with immediate resistance seen at Rs 1,05,100 per 10 gram and subsequent resistance at Rs 1,06,860 per 10 gram. On the downside, initial support is placed at Rs 1,02,000 per 10 gram, followed by Rs 1,01,200.

WTI crude oil closed the week above $64 per barrel as markets assessed growing US pressure on India to cease Russian oil imports, a larger-than-expected drawdown in US crude inventories, and intensifying attacks on energy infrastructure between Russia and Ukraine. Oil prices may swing between gains and losses as traders assess fading summer driving demand in the US and increasing supply as OPEC+ gradually unwinds production cuts.

Base metals ended the week on a mixed note, with copper emerging as the clear outperformer, closing the week above $9,900 per tonne. The red metal drew strength from expectations of a September rate cut and US Geological Survey’s move to place copper on its draft list of critical minerals. Aluminium, meanwhile, finished slightly lower but remained cushioned by Beijing’s cap on smelting capacity, rising energy costs abroad, and falling LME inventories.

Markets now look ahead to the upcoming US labour data, which could prove pivotal in shaping the Fed’s next move. A stronger GDP revision and expected PCE figures have kept a September rate cut on the table. With Fed Chair Powell recently highlighting downside risks to the labour market, any softness in the August jobs report could solidify the case for policy easing. Coupled with the increasingly dramatic standoff between the Federal Reserve and President Trump, this could pave the way for a sustained rally in bullion as investors seek safety amid deepening uncertainty.

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