Gold prices are rising today due to the weak US dollar and hopes for a rate cut by the US Federal Reserve. US inflation in focus

Gold prices rose during the early morning session on all exchanges. On the Multi Commodity Exchange (MCX), gold prices opened today at ₹71,880 per 10 grams and reached an intraday high of ₹71,995 within minutes of the opening bell. The spot price of gold rose by around 0.50 percent today to reach 2,516 per ounce, while the COMEX gold price gained half a percent to reach 2,550 per troy ounce.

According to commodity market experts, gold prices are on the uptrend today due to the weakness of the US dollar and the rumors of a rate cut by the US Federal Reserve. However, they said that gold investors are closely monitoring the inflation numbers in the US as the US initial jobless claims and GDP data will be released today. They noted that gold prices today are in a range between ₹71,500 and ₹72,300. In case of injury ₹72,300, the MCX gold price could ₹73,500, while the spot price of gold is expected to be between $2,480 and $2,530 per ounce.

Trigger for the gold price today

When asked about the triggers pushing gold prices higher today, Anuj Gupta, Head of Commodities and Currencies at HDFC Securities, said, “Gold prices are rising today as the market is expecting a rate cut at the upcoming US Federal Reserve meeting in September 2024. This has put pressure on the US dollar exchange rate and also helped the gold price rise. However, US initial jobless claims data and GDP data are expected today and the market is expected to closely monitor these important data as it gives an idea of ​​the US inflation rate expected next month.”

“The rally follows Jerome Powell's dovish speech, which reinforced expectations of rate cuts starting in September 2024. Markets are pricing in cuts of at least 0.75 basis points by year-end. However, the exact magnitude, pace and frequency of these rate cuts will depend on future economic data, particularly inflation, employment numbers and other key economic indicators. As a result, global markets are actively pricing in these potential cuts and gold, a non-yielding asset, is likely to benefit from the low interest rate environment. ₹71,500 will serve as a good support for entry into gold buying in case of a decline. In contrast, ₹72,500 will continue to act as resistance,” said Jateen Trivedi, VP Research Analyst – Commodities and Currencies at LKP Securities.

US inflation in focus

Market participants are awaiting US data on initial jobless claims and GDP, due at 12:30 GMT. Personal consumption expenditures (PCE) data expected on Friday could provide further clues on the interest rate outlook.

According to the CME FedWatch tool, traders have fully priced in a Fed easing next month. The probability of a 25 basis point cut is 65.5 percent, while the probability of a deeper 50 basis point cut is about 34.5 percent.

On Wednesday, Atlanta Fed President Raphael Bostic said it may be “time for action” on rate cuts, given falling inflation and rising unemployment, but he remained cautious.

“Visible short positions remain near decade lows. Sentiment in gold markets is unanimously optimistic. Despite the strong fundamental backdrop, we see significant near-term risks related to positioning,” said Daniel Ghali, commodity strategist at TD Securities, in a note.

(With contributions from Reuters)

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