Gold prices on the Multi Commodity Exchange (MCX) opened at Rs 63,000 per 10 grams and dropped to an intraday low of Rs 62,146, while in the international market, prices were around $2,033.25 per troy ounce. Meanwhile, silver opened at Rs 72,080 per kg and hit an intraday low of Rs 71,915 on the MCX, with prices hovering around $22.97 per troy ounce in the international market.
Manav Modi, Analyst at MOFSL, noted that gold prices remained steady, retaining most of their losses from the previous week. This was due to investors questioning bets on early interest rate cuts by the Federal Reserve.
Traders have scaled back bets on the Fed trimming interest rates as soon as March 2024, leading to sharp gains in the dollar. It is expected that the US CPI data will show a slight increase in inflation in December.
Moreover, Fed officials have been pushing back against expectations for early rate cuts. Atlanta Fed President Ralph Bostic stated that he remained biased towards monetary policy remaining tight in the near term.
Anuj Gupta, Head of Commodity and Currency at HDFC Securities, pointed out that gold and silver prices closed with a negative note, as the dollar index recovered from lower levels based on FOMC minutes indicating uncertainty about the timing of interest rate cuts. He also highlighted the thin physical demand for gold and silver in the physical market.
Additional insight: The driving force behind the fluctuations in gold and silver prices is the uncertainty surrounding the Federal Reserve’s stance on interest rate cuts. The upcoming US CPI data will provide more clarity on inflation trends, which could further impact market expectations. Furthermore, the comments from Fed officials show that the central bank is taking a cautious and data-driven approach to its monetary policy, which could continue to influence the direction of gold and silver prices.
