Gold rates today edge higher on weak US dollar, US Fed rate cut hopes. US inflation in focus

Gold rates edged higher during the early morning session across bourses. On the Multi Commodity Exchange (MCX), gold rates today opened at ₹71,880 per 10 gm and touched an intraday high of ₹71,995 within a few minutes of the Opening Bell. Spot gold price today surged around 0.50 per cent and touched 2,516 per ounce, while the COMEX gold price went up by half a per cent and hit 2,550 per troy ounce.

According to commodity market experts, gold prices today are on an uptrend due to weakness in the US dollar price and the US Fed rate cut buzz. However, they said that gold investors are vigilant about the US inflation print as US initial jobless claims and GDP data are due today. They noted that gold prices today may be traded range-bound between ₹71,500 and ₹72,300. On breaching ₹72,300, the MCX gold rate may touch ₹73,500 soon, whereas spot gold prices are expected to trade from $2,480 to 2,530 per ounce.

Triggers for gold price today

Asked about the triggers fueling gold rates today, Anuj Gupta, Head of Commodity & Currency at HDFC Securities, said, "Gold prices are rising today as the market is expecting a rate cut in the upcoming U.S. Fed meeting in September 2024. This has put U.S. dollar rates under pressure, also abetting the gold price rally. However, U.S. initial jobless claim data and GDP data are expected today, and the market is expected to remain vigilant about these important data as they would give an idea about the U.S. inflation print, which is expected next month."

"The rally follows Jerome Powell's dovish speech, reinforcing expectations of interest rate cuts starting in September 2024. Markets are pricing in cuts of at least 0.75 bps by year-end. However, these rate cuts' precise magnitude, pace, and frequency will depend on future economic data, particularly inflation, employment figures, and other key economic indicators. As a result, global markets are actively pricing in these potential cuts, and Gold, being a non-yielding asset, stands to benefit from the lower interest rate environment. ₹71,500 will act as good support on any decline to enter into buying Gold. In contrast, ₹72,500 will continue at resistance," said Jateen Trivedi, VP Research Analyst — Commodity and Currency at LKP Securities.

US inflation in focus

Market participants are awaiting U.S. initial jobless claims and GDP data, which are due at 1230 GMT. Due on Friday, the Personal Consumption Expenditures (PCE) data could offer further clues on the outlook for rates.

According to the CME FedWatch tool, traders have fully priced in a Fed easing for next month, with a 65.5% chance of a 25-basis-point cut and about 34.5% chance of a bigger 50-bp reduction.

On Wednesday, Atlanta Fed President Raphael Bostic said that with inflation down and unemployment up, it might be "time to move" on rate cuts, though he remains cautious.

"Visible short positions remain near decade-lows. Narratives in gold markets are unanimously bullish. We see significant risks to the near-term outlook tied to positioning despite the strong fundamental backdrop," said Daniel Ghali, commodity strategist at T.D. Securities, in a note.

(With inputs from Reuters)

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