Gold rate today at nine-week high on US Fed rate cut buzz, ease in US dollar rate

Gold rate today: On account of easing US inflation data igniting the US Fed rate cut buzz, gold prices witnessed strong upside movement in the week gone by. The yellow metal gained on second week in a row as the potential rate cut buzz in the upcoming US Fed meeting triggered profit-booking in the currency market, which led to ease in the US dollar rate. Gold futures contract on the Multi Commodity Exchange (MCX) ended at ₹63,600 per 10 gm level whereas the spot gold price finished at $2,082 per ounce level.

Triggers for gold price appreciation

Speaking on the reasons that fueled the gold price rally last week, Anuj Gupta, Head — Commodity & Currency at HDFC Securities said, “Gold attracted investors’ attention after better-than-expected US inflation print, which triggered profit-booking in the currency market as the outlook for the US dollar turned weak. The US dollar index came below the 104 level and ended at the 103.89 mark on Friday, logging an intraday loss of 0.26 percent. Ease in the US inflation data has provided fodder to the US Fed rate cut buzz as the market is expecting a potential rate cut in the upcoming US Fed meeting.”

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On key factors that played an instrumental role in gold price appreciation, Sugandha Sachdeva, Founder of WealthWave Insights said, “Gold prices surged for the second consecutive week, reaching a nine-week high and marking gains of around 2 percent. This upward trajectory was primarily propelled by several key factors influencing market sentiment. One significant driver was the release of easing US inflation data, which ignited expectations of potential rate cuts by the US Fed in June. The PCE price index data, a closely monitored metric by the Fed, exhibited a cooling trend in January, registering its smallest annual increase in nearly three years. This development could provide a conducive environment for the US central bank to consider rate adjustments, contributing to the bullish sentiment surrounding gold.”

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However, Sugandha maintained that the US Federal Reserve officials have indicated a measured approach towards rate adjustments, emphasizing the need for further efforts to bring inflation down to the targeted 2 percent level. Despite this cautious stance, gold prices saw a notable uptick towards the end of the week, supported by a weakening dollar index and a decline in US treasury yields. Additionally, weaker-than-expected readings on US manufacturing and consumer sentiment in February prompted a rally in both gold and silver prices.

Key factors to watch

“Market participants are closely monitoring upcoming US employment reports for insights into the potential timing of rate cuts by the Fed. In terms of the price outlook, both gold and silver concluded the week on a strong note, suggesting further upward momentum,” Sugandha added.

Gold price target

On important levels to watch in the bullion market, Sugandha Sachdeva said, “The overall price set-up suggests that intermittent corrections may occur, but they are likely to attract buying interest. Gold has established strong support around the ₹61,800 per 10 gm mark and appears poised to advance towards the ₹64,200 per 10 gm mark in the near term. Similarly, silver has formed a solid base near the ₹70,500 per kg mark and is anticipated to trend higher towards the ₹73,300 to ₹74,000 per kg levels in the coming days.”

Asked about the gold price outlook in the near term, Sugandha Sachdeva said, “Overall, the prevailing factors driving gold prices, including expectations of rate cuts, weakening dollar, and price patterns, indicate a favorable outlook for both gold and silver in the near future.”

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