Commodity Radar: Gold outlook and how to trade amid Fed rate cut expectations, GST boost?

Gold traded slightly lower on Monday, taking cues from international markets, where the yellow metal slipped amid a higher dollar index (DXY). The greenback rose on hopes of September rate cuts following a dovish pivot by US Federal Reserve Chair Jerome Powell at the Jackson Hole symposium last Friday.

While a stronger dollar works against the cause of bullion, the expectation of a rate cut is a positive for the non-yielding bullion.

The MCX October contracts were trading at Rs 1,00,306 per 10 grams, down by Rs 78 or 0.08% around 11:30 am. The yellow metal prices on the COMEX were hovering around $3,408.30 per troy ounce, down by $10.20 or 0.30%.

Commenting on the current trends, Jateen Trivedi, Vice President Research Analyst – Commodity and Currency at LKP Securities said that gold ended last week on a positive note, recovering from recent declines as Fed Chair Powell’s speech at Jackson Hole reinforced expectations of a September rate cut. “This had sparked broad-based dollar weakness and triggered fresh buying across commodities, with gold emerging as a key beneficiary. On the domestic front, MCX Gold October futures closed near Rs 1,00,277, stabilising above critical short-term supports,” Trivedi said.

Trivedi said that the case for commodities is stronger in light of the rate cut expectations benefiting the safe-haven and investment demand. The focus this week will be on US GDP numbers and the Core PCE Price Index, which will provide critical cues on inflation and growth outlook, he added.

Among the domestic factors, a weaker rupee against the US dollar will support gold prices in India. “Rupee volatility persists amid tariff-related uncertainty. However, sentiment may be cushioned by expectations of a GST reduction before Diwali, as hinted by PM Modi during his Independence Day address,” he added.

Gold has immediate support at Rs 99,800 and stronger support at Rs 98,500. On the upside, resistance is placed around Rs 101,300–101,800, followed by Rs 102,500. The price structure indicates higher lows forming, suggesting momentum is gradually turning positive.

The RSI is at 54.1, moving upward from neutral territory, showing improving bullish momentum without entering overbought levels.

Prices have bounced from the lower band and are approaching the mid-band, indicating potential continuation towards the upper band near Rs 102,500 if momentum sustains.

EMA (21 & 8): The 8-day EMA is attempting to cross above the 21-day EMA, a short-term bullish sign. Sustaining above Rs 100,250 would strengthen the bullish crossover.

The MACD histogram is narrowing, signaling momentum shift from bearish to bullish. A crossover in coming sessions will confirm fresh upside momentum.

How to trade gold?

Gold is likely to trade with a positive bias this week. Buying on dips near Rs 99,800 is favored, with stop-loss at Rs 98,500. Upside targets are seen at Rs 101,300, Rs 101,800, and Rs 102,500.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)