Today’s Gold Price Surges to Record High Following US Federal Reserve Rate Cut and Weak US Dollar – Analysts Predict Continued Growth

Gold rate today: Following a significant 50 basis point cut by the US Federal Reserve, the price of gold experienced a notable increase last week. This uptrend was primarily driven by the weakening of the US dollar after the Fed’s decision. Spot gold prices reached a high of $2,625 per troy ounce before the market closed on Friday. On the Multi Commodity Exchange (MCX), the gold rate closed at ₹74,014 per 10 grams. Analysts in the commodity market suggest that the rally in gold may continue, especially with signals from US Fed Chair Jerome Powell and other officials indicating the possibility of two more rate cuts in 2024. They recommend investors to accumulate gold during significant dips, with expectations of the MCX gold rate testing resistance around ₹74,500, potentially leading to some profit-taking at these levels.

Triggers for gold price

Explaining the surge in gold prices post the US Fed meeting, Sugandha Sachdeva, Founder of SS WealthStreet, pointed out, “The upbeat trend in the gold market continues, with prices reaching new record highs of $2,625 per ounce in global markets towards the end of the week. This surge is largely a result of the initiation of a monetary easing cycle in the US after four years, following the Federal Reserve’s recent 50 basis point rate cut, which has renewed interest in gold. As US inflation nears the Fed’s 2% target, the central bank has hinted at a further 50 basis point rate cut by the end of 2024, further driving up the price of gold. Gold has been on an upward trajectory since Q4 2023, with a year-to-date gain of over 27%.”

Besides the impact of the US Fed rate cut on gold prices, Sugandha Sachdeva of SS WealthStreet also highlighted other contributing factors, stating, “A weakening dollar, escalating tensions in the Middle East, and increased inflows into global gold ETFs, particularly from Western nations, have further bolstered the price of gold.”

Gold rate today: Change in trade pattern

Anticipating a continued upward trend in the gold market, Vaibhav Shah, Fund Manager at Torus Oro PMS, expressed, “We anticipate that the bullish trend in gold will persist due to several factors: Heightened geopolitical tensions could lead to fresh investments in safe-haven assets like gold, a deeper rate cutting cycle may result in lower real interest rates making gold a more attractive investment option, and the ongoing record purchases of gold by central banks will help maintain the momentum in prices.”

Providing advice to long-term investors, Alex Kuptsikevich, Senior Market Analyst at FxPro, emphasized the importance of staying alert to various triggers, stating, “A decrease in government bond yields often increases interest in gold as an alternative for capital preservation. This inverse correlation worked effectively in the past, but has shown signs of strain this year, especially when gold prices and yields began rising simultaneously. Any further significant rise in gold prices amidst rising bond yields could indicate a flight from dollar assets, possibly signaling a peak for gold.”

Moreover, the FxPro expert mentioned, “Forced liquidation of short positions could push gold prices to new highs, especially if the US dollar remains strong against major currencies while bond yields are on the rise, creating a challenging environment for gold.”

Sugandha Sachdeva of SS WealthStreet recommended adopting a buy-on-dips strategy, stating, “Opportunities to buy gold on corrections should be considered, and a phased accumulation approach could be prudent as prices are expected to reach new highs. Crucial support levels to watch are around ₹72,700 and ₹70,900 per 10 grams. In the upcoming week, market participants will closely monitor US Personal Consumption Expenditure (PCE) and Core PCE Index data, which are key indicators of inflation favored by the Fed, likely impacting the trajectory of gold.”

Gold price outlook

Sugandha Sachdeva noted, “The overall outlook remains positive for gold, although prices may face resistance around ₹74,500 per 10 grams, potentially leading to profit-taking. Internationally, gold is expected to encounter key resistance levels at $2,680 per ounce, with support levels set at $2,540 and $2,470 per ounce.”

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.