Gold prices cool off by Rs 900 from highs after Fed remarks on potential rate cuts. Will the uptrend resume?
Gold October futures prices were trading at Rs 1,13,400/10 grams, lower by Rs 436 or 0.38% around 9:10 am.
Silver December futures prices on MCX mirrored the sentiment and opened lower by Rs 312 or 0.23% at Rs 1,34,750/kg. The white metal prices also witnessed an overall surge of Rs 12,877 in the month so far.
In the international market, gold prices fell on Wednesday as investors booked profits after hitting a record high in the previous session, while markets weighed US Federal Reserve Chair Jerome Powell‘s cautious remarks on potential interest rate cuts.
Spot gold slipped 0.3% to $3,753.22 per ounce, as of 0224 GMT.
On Tuesday, gold and silver settled on a positive note in the domestic market and international markets. Gold October futures contract settled at Rs 1,13,836 per 10 grams with a gain of 1.43% and silver December futures contract settled at Rs 1,35,062 per kilogram with a gain of 1.13%.Gold and silver extended their gains and set new records amid profit-taking in the dollar index and safe-haven buying. Gold prices hit a lifetime high and silver prices hit a 14-1/2-year high in the international markets, while both precious metals set new record highs in the domestic markets.The dollar index dropped again and the rupee slipped to lifetime lows against the US dollar, supporting gold and silver prices. Today, the US Dollar Index (DXY) was hovering near the 97.35 mark, gaining 0.08 or 0.09%.
“Robust global central bank buying, increasing ETF inflows and safe-haven buying are supporting gold and silver prices. However, the Fed Chairman shows concerns about inflation and the US job markets, and if the US Fed’s wait-and-see policy on further rate cuts continues, it could limit gains of precious metals,” said Manoj Kumar Jain of Prithvifinmart Commodity Research.
Powell said on Tuesday the central bank needed to continue balancing the competing risks of high inflation and a weakening job market in coming rate decisions, even as his colleagues staked out arguments on both sides of the policy divide.
Markets anticipate two more 25-basis-point rate cuts this year, with a 93% probability in October and a 77% probability in December, according to the CME FedWatch tool.
“We expect gold and silver prices to remain volatile this week amid volatility in the dollar index, volatility in the global financial markets and ahead of the US core PCE price index data. Gold is expected to trade in the range of $3,654–3,840 per troy ounce and silver is expected to trade in the range of $42.40–45.50 per troy ounce this week,” he added.
How to trade gold?
Manoj Kumar Jain suggested the following ranges for gold and silver on MCX:
- Gold has support at Rs 1,13,200–1,12,650 and resistance at Rs 1,14,200–1,14,800
- Silver has support at Rs 1,33,600–1,32,400 and resistance at Rs 1,36,600–1,38,000
Jain suggests buying gold around Rs 1,12,500 with a stop loss of Rs 1,11,880 for a target of Rs 1,14,400 and waiting for some corrective dips in silver before initiating fresh long positions.
Gold rates in physical markets
Gold Price today in Delhi
Standard gold (22 carat) prices in Delhi stand at Rs 86,496/8 grams while pure gold (24 carat) prices stand at Rs 92,896/8 grams.
Gold Price today in Mumbai
Standard gold (22 carat) prices in Mumbai stand at Rs 85,144/8 grams while pure gold (24 carat) prices stand at Rs 91,520/8 grams.
Gold Price today in Chennai
Standard gold (22 carat) prices in Chennai stand at Rs 85,024/8 grams while pure gold (24 carat) prices stand at Rs 91,352/8 grams.
Gold Price today in Hyderabad
Standard gold (22 carat) prices in Hyderabad stand at Rs 85,184/8 grams while pure gold (24 carat) prices stand at Rs 91,544/8 grams.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)