Gold Price Today: How Will the US Federal Reserve Rate Cut and Weakening US Dollar Impact Gold Prices? – Analysis

Gold rate today: Following US Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium, gold prices surged across markets on Friday. On the Multi Commodity Exchange (MCX), gold rates hit an intraday high of ₹71,940 per 10 gm, marking a one percent increase from the intraday low of ₹71,302, as Powell hinted at a potential rate cut in the September US Fed meeting.

Market experts believe that the US Fed minutes and Powell’s speech have strengthened the likelihood of a rate cut in the upcoming US Fed meeting, leading to an expected rise in gold prices on Monday. Despite this optimism, they caution that the MCX gold rate could face resistance at the ₹72,300 mark. A buy-on-dips strategy is recommended due to the overall bullish sentiment surrounding the precious metal. The US dollar has also weakened, reaching a seven-month low following Powell’s dovish comments on interest rates.

US Fed rate cut buzz

Discussing the current outlook for gold prices, Sugandha Sachdeva, Founder of SS WealthStreet, highlighted the record-high gold price of $2,531 per ounce in the international market. This increase is attributed to growing expectations of a monetary easing cycle in the US next month. Recent Fed minutes and Powell’s speech at Jackson Hole indicated a high probability of a 25 basis points rate cut in September, with hints of a potentially larger reduction. This speculation, coupled with easing inflationary pressures and labor market weaknesses, has fueled the surge in gold prices.

Retracement in US dollar rates

Furthermore, Sugandha noted that the weakening dollar index, which hit a seven-month low, has further boosted demand for gold. Increased holdings in the SPDR Gold Trust reflect renewed investment interest in gold as lower interest rates reduce the opportunity cost of holding the precious metal.

With strong buying interest in gold driven by expectations of lower interest rates, investors are inclined towards non-interest-bearing assets like gold, making it more attractive,” says Sugandha Sachdeva from SS WealthStreet.

Gold rate today: Important levels to watch

Looking ahead, Sugandha Sachdeva pointed out that gold prices are currently experiencing resistance at ₹72,300 per 10 gm following a recent rally. A breakthrough above this level could propel prices to ₹73,500 per 10 gm while support is seen at ₹70,500 per 10 gm.

Gold price target in 2025

Anuj Gupta, Head of Commodity & Currency at HDFC Securities, advises investors to consider buying and holding gold for the medium to long term, anticipating the transition from a high to low interest rate regime beginning with the September US Fed rate cut. This shift is expected to maintain gold as an attractive ‘buy-on-dips’ asset over the next six to nine months.

Jonathan Rose, CEO of Genesis Gold Group, believes that the market’s anticipation of a September interest rate cut is driving positive reactions in financial and gold markets. Historical trends suggest that rate cuts have been favorable for gold prices, and with current market instability, Rose forecasts that gold could reach $3,000 an ounce by 2025.

Disclaimer: The views and recommendations above are those of individual analysts or broking companies, not Mint. Investors should consult certified experts before making any investment decisions.