Gold prices saw gains in the domestic futures market this morning, with a noticeable uptick driven by positive global cues. This movement comes ahead of the release of the minutes from the Federal Reserve’s last policy meeting, which is expected to provide hints about the potential timeline for the US central bank to start its rate-cutting cycle. Traders and investors are highly anticipating that the Federal Reserve will begin reducing policy rates in September this year. According to the CME FedWatch Tool, there is currently a 67 per cent chance of a rate cut at that time.
In the international market, US gold futures increased by around 0.5 per cent. Similarly, MCX Gold for August 5 delivery rose by about 0.4 per cent, crossing the level of ₹71,850. As of 11:40 am, MCX Gold was trading 0.43 per cent higher at ₹71,864 per 10 grams, reflecting the broader optimism in the market.
Gold has outperformed the equity benchmark Nifty 50 in the first half of 2024, buoyed by robust buying from central banks, ongoing geopolitical uncertainties, and the anticipation of rate cuts. Domestic spot gold prices have surged nearly 14 per cent during this period, compared to an 11 per cent rise in the Nifty 50. This strong performance underscores the precious metal’s appeal as a safe-haven asset amid economic and political turmoil.
Experts believe that several factors will continue to support the bullish trend in gold prices. Geopolitical tensions remain a significant driver, prompting investors to seek refuge in gold. Central bank buying has also been a crucial factor, with many institutions increasing their gold reserves to hedge against economic uncertainties.
The potential for monetary easing by the US Federal Reserve further adds to the optimism, as lower interest rates typically boost the appeal of non-yielding assets like gold. Additionally, robust retail demand from China is expected to sustain the upward momentum in gold prices.
Market analysts are anticipating some volatility in gold prices in the near term, influenced by US macroeconomic data and movements in the dollar’s value. Manoj Kumar Jain of Prithvifinmart Commodity Research predicts that gold and silver prices will remain volatile this week, driven by key US data and fluctuations in the dollar index. He noted that international gold has support levels at $2,322-2,310, with resistance at $2,350-2,368 per troy ounce. For silver, support is expected at $29.33-29.05, with resistance at $29.88-30.20 per troy ounce.
On the MCX, Jain highlighted that gold has support at ₹71,330-71,100 and resistance at ₹71,800-72,040. For silver, the support levels are at ₹89,400-88,800, with resistance at ₹90,500-91,100. Jain suggests buying gold on dips around ₹71,400, with a stop loss at ₹71,180 and a target of ₹71,850.
Ajay Kedia, director of Kedia Advisory, pointed out that gold is showing positive momentum on the hourly timeframe, with prices trading firmly above the 50-period moving average. This upward trajectory indicates strong bullish sentiment, suggesting a continued rise in value.
Kedia advises traders to watch for sustained movement above this key support level, which could signal further gains. He predicts that gold may trade in the range of ₹71,200-72,020 for the day, with support at ₹71,380 and resistance at ₹71,790.
Brokerage firm Motilal Oswal Financial Services also expects MCX Gold to trade within a range for the session. They identified support for gold at ₹71,500-71,300, while resistance is seen at ₹71,850-72,050. This outlook aligns with the broader market sentiment, which remains cautiously optimistic about the near-term prospects for gold.
As the day progresses, traders and investors will closely monitor developments from the Federal Reserve and other macroeconomic indicators that could influence gold prices. The precious metal’s performance will likely continue to reflect its role as a hedge against uncertainty, drawing strength from both global economic conditions and investor sentiment.
