Gold prices hold near Rs 1.30 lakh as traders brace for a Fed rate cut. Is a breakout above Rs 1.31 lakh next?

Gold prices in India held steady on Thursday, hovering just above the Rs 1.30 lakh mark as traders positioned cautiously ahead of next week’s U.S. Federal Reserve policy meeting, where markets now overwhelmingly expect an interest-rate cut. On the MCX, gold futures opened at Rs 1,30,799 per 10 grams for 24-karat purity, from Rs 1,30,462 at the previous close, and last traded at Rs 1,30,414.

The current price of 24-karat gold in Delhi stands at Rs 13,074 per gram, while 22-karat gold is pegged at Rs 11,986 per gram.

In the global market, bullion stayed firm above the $4,200 level, supported by weak U.S. private payrolls data that reinforced expectations of a rate cut at the Federal Reserve’s December 9–10 meeting. Spot gold held at $4,207.56 per ounce in early Asian hours, while U.S. gold futures inched 0.1% higher to $4,237.50.

CME’s FedWatch tool now assigns an 89% probability to a rate cut next week. The dollar, meanwhile, slipped to a five-week low after softer-than-expected data deepened conviction that the Fed will ease policy.

Rahul Kalantri, VP Commodities at Mehta Equities, said, “Gold and silver traded with sharp intraday volatility, rebounding from the day’s lows but failing to sustain gains, ultimately closing flat. Precious metals inched toward fresh highs on Wednesday as market participants reacted to key U.S. economic data and rising geopolitical tensions.”
Kalantri pointed to the sharp miss in the ADP employment report, noting: “The ADP Non-Farm Employment Change report released yesterday came in well below expectations, with a significant miss that has fueled speculation about the Fed’s next steps. The weak data pushed the dollar index below the 99 mark, giving additional momentum to precious metals.”

On the near-term outlook, Kalantri said: “As economic uncertainty deepens amid rising geopolitical risks, investors continue to lean on gold’s safe-haven strength. Today’s U.S. PCE data will provide further direction to precious metals. Gold has support at $4175-4145, while resistance at $4270-4295. Silver has support at $57.70-56.85 while resistance is at $58.95-59.45. In INR gold has support at Rs1,29,450-1,28,750 while resistance at Rs1,30,950-1,31,700. Silver has support at Rs1,80,750-1,79,200 while resistance at Rs1,83,510, 1,84,670.”

Jigar Trivedi, Senior Research Analyst at Reliance Securities, said gold “edged above $4,210/oz, staying near a six-week high as investors grew more confident of a Federal Reserve rate cut next week.”

Trivedi highlighted the sharp deterioration in U.S. hiring trends and said, “November ADP data showed a surprising decline of 32,000 private sector jobs, well below expectations for a 10,000 gain and marking the third drop in four months. This represents the sharpest hiring slowdown since 2023, reinforcing concerns about a cooling US labour market.”

Trivedi noted that the report aligned with dovish signals from Fed officials, and said, “The report aligned with dovish signals from Fed officials, who emphasised the need to address slower job growth. In response, rate futures priced in nearly a 90% chance of a 25 bps cut next week. Investors now turn to delayed September PCE data on Friday for further clues on monetary policy.”

He added that geopolitical tensions were also lending a small support: “Adding some support was a geopolitical risk premium, as the US and Russia concluded talks on the Ukraine war without any breakthroughs.”

On domestic levels, Trivedi said, “MCX Gold February may experience some profit booking and Rs. 129,500/10g is a support still the undertone is bullish , we may see Rs 131,000/10g on the higher side.”

Also read: The way it’s going, will Rupee breach the 100 mark sooner or later?

With domestic prices now tracking the upper end of the resistance band flagged by analysts, between Rs 1,30,950 and Rs 1,31,700, traders will watch the U.S. PCE inflation data and next week’s Fed decision for the next directional trigger. A dovish tilt could push gold decisively above Rs 1.31 lakh, while stronger-than-expected inflation may pause the rally at current levels.

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