Gold prices hover near highs as Fed meeting outcome approaches. What’s the right trading strategy now?
Market attention is firmly on the FOMC meeting outcome, where the Fed is widely expected to cut interest rates by 25 basis points after a long pause. Traders are watching closely for commentary from Fed Chair Jerome Powell on the future trajectory of rate cuts.
A dovish stance could propel gold to fresh record highs, while a neutral or hawkish tone may trigger profit-booking at elevated levels.
Manav Modi, Analyst – Precious Metals at Motilal Oswal, noted, “Dollar traded near a 2-1/2-month low against the euro; US Yields also slumped in yesterday’s session, hovering around 4%. Market participants are awaiting Governor Powell’s decision and remarks in this week’s policy meeting, and a 25 bps rate cut is expected after a long pause.”
Rahul Kalantri, VP Commodities at Mehta Equities, added that, “Gold extended gains as the dollar index weakened and expectations grew for aggressive Fed rate cuts following weak U.S. data. Gold surged past $3,700 per ounce, setting another record high.”
Trading strategies for gold ahead of Fed outcome
According to Manoj Kumar Jain of Prithvifinmart Commodity Research, gold is likely to remain volatile ahead of the policy event, with immediate support at $3,700–3,674 per troy ounce and resistance at $3,740–3,764.On the MCX, support is placed at Rs 1,09,850–1,09,500, while resistance is seen at Rs 1,10,580–1,11,000. He advises, “buying gold around Rs 1,09,800 with a stop loss of Rs 1,09,380 for a target of Rs 1,10,650.”Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, also recommended a buy-on-dips approach, saying, “Technically, gold remains positive as long as it sustains above $3,580 on Comex and Rs 1,07,500 on MCX. A fall below these levels may signal a reversal pattern. Traders should look to buy on dips heading into the policy event.”
Outlook for gold
Analysts expect gold to test fresh highs if the Fed signals a more accommodative stance for the rest of the year.
Renisha Chainani, Head of Research at Augmont, said, “Gold is currently near record levels, and the next FOMC decision is going to be key. While a 25 bps cut base case is likely priced in, if the Federal Reserve signals that their position is dovish and that’s considering more cuts in the future, gold could test new highs.”
She added that the “long-run remains bullish on gold due to structural U.S. debt, reserve diversification, and geopolitical issues, which will continue to support gold’s multi-year uptrend.”
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In conclusion, traders are expected to maintain a cautious but positive bias, with gold prices potentially targeting the $3,800 per ounce mark if Powell’s guidance points to continued monetary easing.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)