Gold rate today: On account of hawkish US Fed on interest rate fueling US dollar rates, gold price today witnessed a sharp fall in the early morning session. Gold futures contract on the Multi Commodity Exchange (MCX) for August 2024 expiry opened with a downside gap at ₹71,475 per 10 gm and touched an intraday low of ₹71,401 within a few minutes of the opening bell. In the international market, the spot gold price oscillates around $2,315 per ounce, whereas the Comex gold price is around $2,330 per troy-ounce mark.
Gold prices, as per the insights of our esteemed commodity market experts, are currently under pressure due to the hawkish US Fed’s interest rates. They have observed that while the US Fed has maintained the status quo on interest rates, its commentary is hawkish on rate cuts in 2024. This shift, from initially announcing three rate cuts to just one, has led to an increase in US dollar rates and Treasury yields, thereby impacting gold prices.
Hawkish US Fed
When we delve into the reasons behind the global decline in gold prices, Anuj Gupta, the Head of Commodity & Currency at HDFC Securities, provides a clear explanation. He points out, “The drop in gold prices today is a direct result of the US Federal Reserve’s meeting outcome. The Fed had initially announced three rate cuts in 2024, but in their recent commentary, they have revised this to just one. This change has led to an increase in US dollar rates and Treasury yields, causing gold prices to fall.” This direct correlation between the US Fed’s decisions and gold prices is crucial to understand the market dynamics.
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Dhawal Ghanshyam Dhanani, Fund Manager at SAMCO Mutual Fund, said, “The US Fed decided to hold benchmark rate in 5.25-5.50% target range (for a 6th consecutive meeting), unlike European Central Bank which became the fourth major central bank to cut its policy rate after Switzerland, Sweden and Canada last week. Until now, the market priced for 1-2 rate cuts by December; however, the Fed recommended 2-3 cuts back in March via their ‘dot plot’. To the surprise of many, the Fed indicated a big hawkish stance by suggesting just one rate cut coming this year versus three in March — cementing higher for longer rates for the markets.”
“Federal Reserve officials dialled back their expectations for interest-rate cuts this year. However, Chair Jerome Powell kept the door open for more as he emphasized the new forecasts represented a conservative approach. Comex Gold trades 1% lower after three consecutive sessions of gains, and LME base metals partially reverse advances made yesterday after a cooler US inflation report as Fed policymakers indicated they now expect to cut rates only once in 2024 compared to three reductions in the March meeting. The Fed’s “dot plot” showed four policymakers saw no cuts this year, while seven anticipated just one reduction and eight expected two cuts,” said Kotak Securities.
Gold rate today: Important levels to watch
For those who are actively monitoring the gold market, it’s crucial to note the key levels. On the MCX, gold rate has immediate support at the ₹70,800 mark, but it may face a hurdle at the ₹72,000 per 10 gm level. In the international market, spot gold has immediate support at the $2,300 level, with crucial support at $2,280 per ounce. On the higher side, spot gold has an immediate hurdle at $2,330, and a crucial hurdle at $2,350. Being aware of these levels empowers you to make informed decisions in the gold market.
Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 13 Jun 2024, 10:16 AM IST
