Monday, July 22, 2024

Gold price reaches six-week peak amid growing optimism for US Fed rate cut; attention shifts to US dollar rate

Gold Price Rally: Experts Optimistic for US Fed Rate Cut

Gold prices today hit a six-week high in the international market, reaching $2,391 per ounce, as optimism for a US Fed rate cut and weakness in the US dollar rates boosted the precious metal. In the domestic market, gold futures on the Multi Commodity Exchange (MCX) for August 2024 expiry crossed the psychological ₹73,000 mark, recording a 2 percent weekly gain. On Friday, MCX’s gold rate surged by ₹671 per 10 gm, closing at ₹73,038. Meanwhile, silver prices also climbed to a four-week high at $31.20 per ounce.

Commodity market experts attribute the uptrend in gold prices to the anticipation of a US Fed rate cut in an upcoming meeting, which has weakened the US dollar in the forex market. This scenario typically makes gold more appealing to investors. Additionally, easing US inflation concerns following positive job data and low core PCE index readings have further fueled the gold price rally.

Anuj Gupta, Head of Commodity & Currency at HDFC Securities, highlighted the reasons behind the gold price rally, emphasizing the impact of US Fed rate cut optimism on the US dollar rate. Similarly, Sugandha Sachdeva, Founder of SS WealthStreet, pointed to the weakening dollar index and expectations of an interest rate cut by the US Federal Reserve as catalysts for the rise in gold prices.

Looking ahead, experts suggest keeping an eye on key levels for gold price movements. Sugandha Sachdeva mentioned support levels around ₹70,700 and ₹72,200 per 10 gm, with a target range of ₹73,700 to ₹74,200 per 10 gm or approximately $2,420 per ounce.

Factors that may dictate gold price in the near term include the upcoming US Consumer Price Index (CPI) data for June, which will influence the US central bank’s decision on rate cuts and, subsequently, impact gold prices. Investors are advised to consult certified experts before making any investment decisions.

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