Perspective on Economy, Gold & Oil Prices by by Ms. Riya Singh, Emkay Global Financial Services
Below the Perspective on Economy, Gold & Oil Prices by by Ms. Riya Singh, Emkay Global Financial Services
India’s central bank continues to balance its dual mandate of price stability and growth, with Governor Sanjay Malhotra emphasizing that monetary policy has not “lost sight” of supporting economic expansion even as inflation remains well contained. The Reserve Bank of India has left the repurchase rate unchanged in its August policy review, following a cumulative 100 basis point cut since February, and July’s consumer price index fell below the central bank’s target band for the first time in eight years, potentially giving policymakers room for further easing if growth softens. The Indian Rupee has struggled to capitalize on recent U.S. dollar weakness amid looming trade tensions, as the U.S. is set to enforce an additional 25% tariff on Indian imports—taking cumulative levies to 50%—which could trim 0.6–0.8 percentage points off annual growth. To mitigate these headwinds, the government is exploring measures to stimulate domestic consumption, including GST reforms expected around Diwali that aim to simplify slabs and boost discretionary spending. Persistent foreign fund outflows—totaling over Rs. 25,700 crore in August—have further pressured the currency. The USD/INR pair opened near 87.60, remaining above its 20-day EMA around 87.35, with near-term support at 86.55 and resistance at 88.25. Market participants are closely watching Q2 GDP data, scheduled for release on Friday, for further cues on India’s growth trajectory amid these domestic and external challenges.. July CPI fell below the RBI’s 2–6% target band for the first time in eight years, giving policymakers room for further easing after 100 bps of cuts since February. FIIs pulled?25,751 crore from equities in August. USD/INR trades near 87.50, holding above the support of 87.35, while resistance is at 87.90. US enforcement of an additional 25% tariff on Wednesday and Q2 GDP data on Friday will be the key domestic triggers.
Gold held steady near $3,367 per ounce as markets weighed the outlook for U.S. interest rates following Federal Reserve Chair Jerome Powell’s cautious comments at the Jackson Hole symposium. Powell highlighted rising risks in the labor market, opening the door to a potential rate cut in September, though inflation concerns remain. Markets now price in an 87% probability of a quarter-point cut next month, with a cumulative easing of 48 basis points expected by year-end. Lower borrowing costs continue to support bullion, while geopolitical tensions and central bank purchases have fueled year-to-date gains of over 25%, primarily in the first four months. Money managers, however, trimmed bullish positions to a six-week low, reflecting caution amid uncertainty, with long-only positions at 177,561 lots and short-only positions rising to eight-week highs. Silver edged higher as well, trading near $38 per ounce, supported by safe-haven demand amid uncertainty over U.S. interest rates. Money managers modestly increased bullish silver positions by 530 net-long contracts to 28,787, while long-only holdings rose to 44,716 lots and short-only positions fell to 15,929. For Gold, $3,284 remains a strong support with resistance at $3450. Momentum to be contained within this range. Silver is trading in an ascending triangle pattern with bullish bias. Support is at $ 38.30 with resistance at $39.10.
Oil prices traded marginally lower after a mixed week as markets balanced potential U.S. rate cuts with ongoing geopolitical and supply pressures. Federal Reserve Chair Jerome Powell signaled a possible quarter-point rate cut in September, supporting crude by boosting expectations for U.S. economic growth and demand. Brent futures now trade at a rare discount to Dubai crude, underscoring weakening supply-demand dynamics in the Atlantic Basin despite OPEC+ resuming millions of barrels per day of idled production. Indian refiners, including Indian Oil Corp., are seeking flexibility in spot crude purchases as domestic diesel demand fell 12% above seasonal norms due to a heavy monsoon. Iraq has increased refining capacity to 1.3 million barrels per day, aiming for 1.65 million b/d, to meet domestic consumption of 1.1 million b/d last year and begin exports of gasoil and jet fuel. Meanwhile, U.S. sanctions on Iranian shipping operators have been countered by Chinese ports handling about 15.5 million barrels of Iranian crude in June. Tariff pressures from the U.S., raising Indian imports to 50% and ongoing Russia-Ukraine tensions add to market uncertainty, keeping oil trading largely volatile.
Above views are of the author and not of the website kindly read disclaimer
