Today’s Gold Price Soaring to New Highs Due to US Fed Rate Cut and Weak Dollar: Analysts Predict Further Growth

Gold Rate Today: Following a significant 50 bps rate cut by the US Federal Reserve, the price of gold experienced a sharp increase last week. The US dollar weakened after this decision, leading to a peak in spot gold prices at $2,625 per troy ounce at the close of the market on Friday. On the MCX, gold rates ended at ₹74,014 per 10 gm. Analysts in the commodity market predict that the positive momentum in gold may persist due to signals from Fed Chair Jerome Powell and other officials indicating two more rate cuts in 2024. They recommend accumulating gold during significant dips, with the possibility of the MCX gold rate testing resistance at ₹74,500 and potential profit-booking around that level.

Triggers for Gold Price Surge:

Explaining the surge in gold prices post the US Fed meeting, Sugandha Sachdeva, Founder of SS WealthStreet, highlighted, “The ongoing rally in gold has pushed prices to new record highs of $2,625 per ounce in global markets towards the end of the week. This increase is largely attributed to the initiation of a monetary easing cycle in the US after four years, with the recent half-percentage-point rate cut by the Federal Reserve renewing interest in gold. With US inflation nearing the Fed’s 2% target, the central bank has hinted at another 50 basis point rate cut by the end of 2024, further boosting gold’s upward trend. Gold has been on an uptrend since Q4 2023, with a year-to-date gain of over 27%.” It is crucial to consider these market dynamics before making any investment decisions.

In addition to the US Fed rate cut, other factors contributing to the rise in gold prices today include a weakening dollar, escalating tensions in the Middle East, and growing inflows into global gold ETFs, particularly from Western nations, further supporting the uptrend in gold prices.

Continued Gold Price Momentum:

Forecasting a sustained bullish trend in gold, Vaibhav Shah, Fund Manager at Torus Oro PMS, mentioned, “We anticipate that the positive momentum in gold will persist due to several factors such as rising geopolitical tensions prompting investors to allocate more towards safe-haven assets like gold, continued rate cuts leading to lower real rates making gold an attractive investment option, and a growing trend of central banks purchasing gold, which will keep the price momentum strong.” Keeping an eye on these factors can help investors navigate the market effectively.

For long-term investors, it is essential to remain vigilant about various triggers affecting gold prices. Alex Kuptsikevich, Senior Market Analyst at FxPro, emphasized, “A decline in government bond yields increases interest in gold as a hedge against capital preservation. However, the correlation between gold prices and yields, which was strong last year, has shown signs of weakening this year. Monitoring these fluctuations is crucial to gauge potential market peaks and shifts in investor sentiment.”

Furthermore, the forced liquidation of short positions could drive gold prices higher towards historic highs, especially in an environment where the US dollar remains steady against major currencies and rising bond yields create challenges for gold investments, indicating a delicate balance in the market dynamics.

Offering strategic advice, Sugandha Sachdeva of SS WealthStreet recommended a buy-on-dips approach: “Any corrections in gold prices present buying opportunities. Adopting a phased accumulation strategy could be wise as domestic prices are expected to reach new record highs. Key support levels to watch are ₹72,700 and ₹70,900 per 10 gm. In the upcoming week, market participants will closely monitor US inflation data, which could impact gold’s trajectory.” This strategic approach can help investors navigate market fluctuations effectively.

Gold Price Outlook:

Sugandha Sachdeva provided insights into the outlook for gold prices, stating, “The overall outlook remains positive, although prices may face resistance around ₹74,500 per 10 gm, possibly leading to profit-taking. In global markets, gold is poised to encounter key resistance at the $2,680 per ounce level, with support levels at $2,540 and $2,470 per ounce.” Staying informed about these support and resistance levels can assist investors in making informed decisions regarding their gold investments.

Disclaimer: It is important to note that the views and recommendations mentioned above are from individual analysts or brokerage firms and do not necessarily reflect the views of Mint. Investors are advised to consult certified experts before making any investment decisions to ensure informed choices.