Gold rate today: Following a crack in the US dollar rate and the US bond yield after a dip in the US inflation from 3.30 percent to 3.0 percent, gold prices worldwide witnessed strong buying interest last week. On a weekly basis, the precious yellow metal logged around a 2 percent rise and touched a one-month high on Friday. In the domestic market, the MCX gold rate for the August 2024 expiry ended at 73,285 per 10 gm. In the international market, spot gold price finished at $2,411 per ounce while COMEX gold price ended at $2,416 per troy ounce.
According to commodity market experts, gold price today is on an uptrend as US inflation dipped from 3.30 percent to 3 percent, triggering profit booking in the currency and US bond market. The rest of the job was done by the promising US job date at the weekend, which further pulled down US dollar rates and the US treasury yields. They said the uptrend in gold prices may continue as these promising US data have triggered buzz about the US Fed rate cut in the upcoming US Fed meeting scheduled for September of this year.
Cracks in US dollar rate, US bond market
Speaking on the triggers fueling gold prices today, Sugandha Sachdeva, Founder of SS WealthStreet, said, “Gold spiralled higher during the week, reaching a one-month high and advancing by more than 2 percent. The rising optimism for an interest rate cut by the US Federal Reserve, sooner than previously anticipated, weakened the dollar index and acted as a catalyst for a strong rebound in gold prices. The recent US core PCE index data, a key inflation gauge, logged its lowest annualized increase over three years. This indicated ebbing economic price pressures and increased the likelihood that the US central bank will start lowering interest rates at its September meeting.”
“Further, gold prices got an additional boost towards the end of the week, as the US economy added 206,000 jobs in June, surpassing expectations. However, unemployment rose to 4.1%, the highest since November 2021, while wage growth cooled. Besides, the job gains for April and May were revised lower, indicating a cooling labour market and decelerating inflation that led to a further slide in the dollar index and enticed buying interest in dollar-denominated gold,” Sugandha added.
Slide in the US inflation print
Pointing towards the US inflation data, Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities, said, “In less than 24 hours, the inflation numbers of two nations came in. The first was the US, which saw a dip in inflation from 3.30 percent to 3.0 percent, while the second was ours, which saw a rise from 4.75 percent to 5.08 percent. US Markets cheered the lower inflation print and celebrated with a new high in equities as ten-year bond yields cracked.”
Rate cut buzz in US Fed meeting
“After a dip in the US inflation print and better-than-expected US job data has fueled buzz for the US Fed rate cut in upcoming US Fed meeting, which is scheduled in September 2024. While speaking in last week’s testimonial in the US Senate, the US Fed chief Jerome Powell had hinted that 2 percent of the US inflation was still far away, but this was not the only parameter to end the high-interest regime,” said Anuj Gupta, Head of Commodity & Currency at HDFC Securities.
Gold price outlook
Expecting the end of consolidation in the gold prices, Alex Kuptsikevich, Senior Market Analyst at FxPro, said, “A soft US CPI report pushed gold above the $2400 mark. The price only climbed above it for a couple of hours in April and barely spent three days above this level in May. In both cases, these climbs shifted the balance to the sellers, followed by a dip below $2300. These episodes may have created a knee-jerk reflex, as the troy ounce price was down about 1% on Friday due to a relatively elevated risk appetite.”
The FxPro expert added, “The gold price is approaching the upper end of the range of the last three months, which could be the end of a consolidation after rallying off the lows of October. There is logic to this idea, as this rally started on policy reversal signals. Recent months have been shrouded in uncertainty due to mixed inflation numbers. And now we are registering a rather high degree of willingness of the Fed officials to start easing soon.”
Speaking on the gold price outlook, Sugandha Sachdeva of SS WealthStreet said, “Price structure suggests that the precious metal has found good support around ₹70,700 and then at ₹72,200 per 10 gm mark and looks to continue with the upward momentum towards ₹73,700 and 74,200 per 10 gm zone or around $2,420 per ounce mark in the coming days.”
On triggers that may dominate gold price movement in the near term, Sugandha Sachdeva said, “All eyes are now on the US Consumer Price Index (CPI) data for June, scheduled for release next week. This data will further influence the US central bank’s rate-cut path and, consequently, gold prices. The CPI data will be critical in confirming whether inflation is indeed cooling, which would bolster the case for a rate cut and likely support higher gold prices.”
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