Gold price rally hits pause after Fed rate cut, opens lower by Rs 500. Should you sell now?
On the Multi Commodity Exchange (MCX), gold October futures opened at Rs 1,09,303 per 10 grams, lower by Rs 519 or 0.47%.
Further, silver December futures contracts also witnessed profit booking, and opened softer by Rs 581 or 0.46% at Rs 1,26,403/kg.
The Fed reduced rates by 25 basis points on Wednesday and indicated it will steadily lower borrowing costs for the rest of this year.
Fed Chair Jerome Powell characterised the policy action as a risk-management cut in response to the weakening labour market, and the central bank is in a “meeting-by-meeting situation” regarding the outlook for interest rates.In the international market, gold prices extended losses on Thursday as the dollar strengthened after the U.S. Federal Reserve cut interest rates by a quarter of a percentage point, as expected, and adopted a measured tone on further policy easing.
On Wednesday, gold and silver settled on a weaker note in the domestic market and international markets. Gold October futures contract settled at Rs 1,09,822 per 10 grams with a loss of 0.30% and silver December futures contract settled at Rs 1,26,984 per kilogram with a loss of 1.43%.
Gold and silver show very high price volatility and see heavy sell-off in the early trading session, but prices recovered from their lows after the Fed rate cuts.
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The U.S. Federal Reserve cut its key interest rate by 25 basis points to 4.25%. Following the Fed’s announcement, the dollar index slipped to its lowest level since February 2022 but later rebounded from the day’s lows.
The U.S. Federal Reserve stated that recent indicators point to a moderation in economic activity during the first half of the year. Job growth has slowed, and while the unemployment rate has ticked up slightly, it remains low. Inflation has increased and continues to stay somewhat elevated.
The U.S. Fed cuts interest rates as per market expectations and also hints at more cuts this year. We expect gold and silver prices to remain volatile this week amid volatility in the dollar index and speculations on further rate cuts from the U.S. Fed this year and gold are expected to trade in the range of $3,534-3,800 per troy ounce and silver is expected to trade in the range of $41.40-44.50 per troy ounce this week,” said Manoj Kumar Jain of Prithvifinmart Commodity Research.
Gold prices have risen 39% so far this year, following 27% gains in 2024, helped by expectations for monetary policy easing by the Fed, lingering geopolitical tensions, and strong central bank buying.
Today, the US Dollar Index, DXY, was hovering near the 96.99 mark, gaining 0.12 0.12%.
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How to trade gold?
Manoj Kumar Jain suggested the following ranges for gold and silver on MCX:
- Gold has support at Rs 1,09,200-1,08,800 and resistance at Rs 1,10,150-1,10,666
- Silver has support at Rs 1,25,500-1,24,200 and resistance at Rs 1,28,000-1,29,500
Jain suggests selling gold below Rs 1,09,700 with a stop loss of Rs 1,10,100 for a target of Rs 1,09,000.
Gold rates in physical markets
Gold Price today in Delhi
Standard gold (22 carat) prices in Delhi stand at Rs 57,840/8 grams, while pure gold (24 carat) prices stand at Rs 61,680/8 grams.
Gold Price today in Mumbai
Standard gold (22 carat) prices in Mumbai stand at Rs 57,688/8 grams, while pure gold (24 carat) prices stand at Rs 61,520/8 grams.
Gold Price today in Chennai
Standard gold (22 carat) prices in Chennai stand at Rs 56,816/8 grams, while pure gold (24 carat) prices stand at Rs 60,592/8 grams.
Gold Price today in Hyderabad
Standard gold (22 carat) prices in Hyderabad stand at Rs 57,248/8 grams, while pure gold (24 carat) prices stand at Rs 60,984/8 grams.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)