Gold rate today: Last week, gold prices saw strong buying interest worldwide following a drop in the US dollar rate and US bond yields due to a decrease in US inflation from 3.30 percent to 3.0 percent. The precious yellow metal recorded a 2 percent rise on a weekly basis, reaching a one-month high on Friday. In the domestic market, the MCX gold rate for the August 2024 expiry closed at 73,285 per 10 gm. Internationally, spot gold price ended at $2,411 per ounce, while COMEX gold price finished at $2,416 per troy ounce.
Experts in the commodity market suggest that the current uptrend in gold prices is a result of the drop in US inflation triggering profit booking in the currency and bond markets. The encouraging US job data over the weekend also contributed to lower US dollar rates and treasury yields. Speculation about a potential US Fed rate cut during the September meeting is further supporting the upward trend in gold prices.
Insight: Factors Driving Gold Prices
Adding perspective on the driving forces behind the surge in gold prices, Sugandha Sachdeva, Founder of SS WealthStreet, emphasized the impact of optimism for an interest rate cut by the US Federal Reserve. This sentiment weakened the dollar index and led to a significant rebound in gold prices. With the US core PCE index reporting its lowest annualized increase in three years, the likelihood of a rate cut in the upcoming months has gained traction.
Additionally, the upbeat US job data, despite some mixed indicators, prompted buying interest in gold towards the end of the week. This, combined with a cooling labor market and decelerating inflation, reinforced the downward trend in the dollar index, further boosting dollar-denominated gold prices.
Insight: Impact of US Inflation Trends
Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities, highlighted the contrasting inflation prints between the US and other nations. While the US experienced a decline in inflation, other countries like India saw an uptick. This divergence played a role in market reactions, with US markets responding positively to the lower inflation figures.
Insight: Speculation on US Fed Rate Cut
Anuj Gupta, Head of Commodity & Currency at HDFC Securities, emphasized the growing speculation around an imminent US Fed rate cut following the latest economic data releases. The signals from the US Fed chief Jerome Powell about the possibility of easing monetary policies have fueled expectations for a rate cut in the near future.
Insight: Outlook for Gold Prices
Alex Kuptsikevich, Senior Market Analyst at FxPro, highlighted the recent movements in gold prices and the potential for a breakout from the current consolidation phase. With expectations of policy reversals and increased Fed willingness to ease monetary policies, the gold price outlook appears favorable in the coming days.
Kuptsikevich also indicated that the gold price’s proximity to the upper end of its recent range suggests a possible end to the consolidation phase. This anticipated rally comes amidst uncertainty related to inflation numbers and signals of Fed officials leaning towards easing measures.
According to Sugandha Sachdeva from SS WealthStreet, the price structure indicates strong support levels for gold around specific marks, hinting at continued upward momentum in the days ahead.
Looking ahead, the focus shifts to the upcoming US Consumer Price Index (CPI) data release, which will offer further insights into the US central bank’s rate-cut trajectory and its impact on gold prices. The CPI figures will play a crucial role in confirming the trend of cooling inflation and its implications for future rate adjustments.
Disclaimer: The views and recommendations provided are based on individual analysts’ assessments and do not represent the views of Mint. Investors are advised to consult certified experts before making any investment decisions.
