Gold Prices Soar to New Highs Amid US Fed Rate Cut Speculation

Gold Prices Soar to New Highs Amid US Fed Rate Cut Speculation

VoM News Desk | December 4, 2023 | 12:43 PM IST | Breaking News | Follow on Google News

Gold Prices Soar to New Highs Amid US Fed Rate Cut Speculation

Gold Prices Soar to New Highs Amid US Fed Rate Cut Speculation

In response to the buzz around a potential US Federal Reserve rate cut following Jerome Powell’s speech, gold prices have soared, reaching new all-time highs in both international and domestic markets. Early in the Asian stock market session, gold prices climbed above $2,100, setting a record at $2,146 per ounce.

Domestic Market Trends and Profit Booking

Similarly, in the domestic market, February 2024 gold futures on the Multi Commodity Exchange (MCX) opened higher and reached a lifetime peak of ₹64,000 per 10 grams. However, a wave of profit booking caused a retraction from these highs, bringing gold prices back below the $2,100 level within an hour of the morning trade.

Silver Prices and International Market Dynamics

The surge in precious metal prices wasn’t limited to gold. Silver rates for March 2024 expiry opened at ₹78,450 per kg on the MCX, quickly hitting an intraday high of ₹78,549 per kg. Internationally, silver prices hovered around $25.50 per ounce.

Factors Driving Gold’s Price Surge

Anuj Gupta, Head of Commodity & Currency at HDFC Securities, attributed the rise in gold prices to speculation of a US Fed rate cut, which is expected to exert pressure on bond yields and US dollar rates. This comes as the German yields slumped to four-month lows, and the 10-year US treasury yields reached two-and-a-half-month lows amid speculation that the Federal Reserve might conclude its tightening cycle. Jerome Powell, in his speech, noted the economy’s slowdown in response to tighter monetary policies, aligning with the Fed’s expectations.

Outlook and Strategy for Gold Investors

Gupta suggested that the trend for gold remains positive in the near term, with strong support at $2,050 per ounce and immediate resistance at $2,025 per ounce. For MCX gold, support is seen at ₹62,800 per 10 gm, with resistance at ₹64,800 per 10 gm. Investors are advised to maintain a ‘buy on dips’ strategy, given the overall positive outlook for the precious metal in the near term.

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VoM News Desk

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