Gold rate today: Gold prices saw a sharp decline last week after nearly reaching a record high of $2,531 per ounce. The COMEX gold price closed at $2,526 per troy ounce, while the spot gold price ended at $2,497 per ounce. On the Multi Commodity Exchange (MCX), gold rates for the October 2024 futures contract concluded at ₹71,460 per 10 gm on Friday.
Experts in the commodity market attribute the drop in gold prices to the mixed US job data released last week, creating uncertainty around potential rate cuts by the US Federal Reserve. The hesitation in Fed rate cuts has led to a decrease in gold prices globally. However, some believe that a rate cut could help stabilize the US job market and are urging US Fed Chairman Jerome Powell to proceed with the decision in the upcoming meeting.
Reasons behind the Gold Price Retreat
Founder of SS WealthStreet, Sugandha Sachdeva, explained that the decline in gold prices from near-record highs was triggered by the release of crucial US payroll data. The report showed slower-than-expected growth in non-farm payrolls for August and revisions of data from July downwards. These factors, combined with a rise in average hourly earnings and a decrease in unemployment rate, reduced the likelihood of a significant rate cut by the Fed. Consequently, the US dollar strengthened, putting pressure on gold prices.
One insight could be that the US economic indicators have a significant impact on the global gold prices, as they influence market expectations and investor sentiment regarding the precious metal’s value.
Additionally, progress in ceasefire negotiations between Israel and Hamas has contributed to the decline in gold prices by reducing geopolitical tensions and diminishing the safe-haven appeal of gold. The resistance level at ₹72,300 per 10 gm has proven to be a significant barrier for MCX gold rates, suggesting potential gains if breached.
Impact on US Fed Rate Cut Expectations
Anuj Gupta, Head of Commodity & Currency at HDFC Securities, expressed concerns over the doubts surrounding the US Fed rate cut following the recent job data. While some anticipate a delay in the rate cut or a smaller cut than expected, Gupta believes a 50 bps reduction is necessary to maintain balance in the US job market. This discrepancy in expectations may influence market volatility leading up to the Fed’s decision.
One additional insight is that market sentiments and speculative behavior can contribute to fluctuations in gold prices, adding complexity to price forecasting and trading strategies.
Supporting the call for a significant rate cut, Standard Chartered analyst Suki Cooper suggests that deeper cuts by the Fed could drive up gold prices towards $2,700 as the year progresses, indicating potential opportunities for investors in the precious metal market.
Current market indicators show a 73% probability of a 25-bp rate reduction by the US Federal Reserve this month, with a 27% chance of a larger 50-bp cut, reflecting the uncertainty and divided expectations among traders.
Gold Price Forecast
Sugandha Sachdeva anticipates that the initiation of an easing cycle by the US could support gold prices, creating buying opportunities around ₹70,900 per 10 gm ($2,470/oz) and ₹70,200 per 10 gm ($2,420/oz) in the near future, as investors react to evolving market dynamics.
(With inputs from Reuters)
Disclaimer: The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
