Gold price dips after 'no aggressive US Fed rate cut' jibe by Jerome Powell. Buy or wait for more correction?

Gold prices slipped by ₹125 to ₹1,12,430 per 10 grams in the domestic futures market on Thursday, mirroring a subdued global trend as traders remained cautious ahead of key U.S. inflation data.

On the Multi Commodity Exchange (MCX), October gold futures dropped ₹125, or 0.11%, to ₹1,12,430 per 10 grams, with a turnover of 6,314 lots.

Similarly, the December contract declined by ₹147, or 0.13%, to ₹1,13,500 per 10 grams in 11,823 lots.

Meanwhile, in the international market, gold prices held steady on Thursday, with slight support from a softer dollar, as investors awaited key U.S. economic data for clues on the Federal Reserve’s policy outlook. As of 0557 GMT, spot gold edged up 0.1% to $3,739.22 per ounce, while U.S. gold futures for December delivery remained flat at $3,769.60.

"Gold prices fell from the peak in yesterday's session amidst some profit booking, volatility in USDINR, slight rise in dollar index and mixed comments from Governor Powell. One week after the rate cut, Fed Governor Powell said the US central bank faces a "challenging situation" with ongoing risks of faster-than-expected inflation while weak job growth raises concerns about labor market health. He offered little clarity on when the Fed might next cut interest rates," said Manav Modi, Analyst – Precious Metal -Research, Motilal Oswal Financial Services Ltd.

Should you buy or wait for more correction?

According to Rahul Kalantri, VP Commodities, Mehta Equities Ltd, ongoing geopolitical tensions will support bullion.

“ After scaling record highs, gold and silver witnessed profit taking as the U.S. dollar strengthened and bond yields rose. Investors also reacted to comments from the Fed Chairman, who expressed concerns over inflation and job growth but refrained from signalling aggressive rate cuts. Despite the pullback, market watchers believe ongoing geopolitical tensions and steady central bank demand will continue to support bullion. Gold has support at $3710-3685 while resistance at $3770-3790. In INR gold has support at Rs1,11,900-1,11,380 while resistance at Rs1,12,950-1,13,450,” Kalantri said.

Meanwhile, Sandip Raichura, CEO – Retail Broking & Distribution and Director at PL Capital, believes that gold is eventually going to rise beyond $4800.

“In the middle of this historical move, it becomes difficult to decide on further levels and we believe Gold is eventually going to rise beyond 4800 USD. Of course, caution is warranted going ahead as any explosive moves like the one we are in may be subject to sudden corrections. As of now, Gold remains in momentum and any longer term breaches below USD 3444 will signal a correction and should be a stop for trading positions. Longer term positions however may use any dips as a buying opportunity as we believe gold has begun a very large move which may last several months,” Raichura said.

He further recommended investors a minimum 5-10 per cent allocation even at current levels to improve risk-adjusted returns over complete economic cycles.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.