The broader picture is still in favor of gold, as the U.S. Federal Reserve and other central banks are likely to stay accommodative for an extended period of time. The dollar index bounced off two-year lows after U.S. data showed manufacturing activity accelerated to a near two-year high in August. A stronger greenback makes gold expensive for holders of other currencies.
The firm manufacturing activity also boosted investor appetite for riskier assets, limiting inflows into safe-haven bullion. However, expectations that U.S. interest rates would stay low for longer under the new monetary policy approach from the Fed put a floor under bullion prices. Fed Governor Lael Brainard said the U.S. central bank would need to roll out more stimulus to fulfill its new promise of stronger job growth and higher inflation.
The U.S. central bank last week announced an average inflation target policy, which will allow rates to stay low even if inflation rises a bit in the future. However, besides other strong fundamentals like weak economy and lower interest rates, Australian and U.S. mints reporting very high demand for gold coins will take gold above $2,000 in the long run.
For the next week, gold may trade in the range of 48200-52600 and Silver may trade in the range of 60200-70400. Whereas on COMEX gold may trade in the range of $1850-$1990 and Silver may trade in the range of $23.00- $29.60.
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