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Business News/ Markets / Commodities/  Gold price dropped 1.4% last week as US Fed rhetoric remained hawkish. Opportunity for bottom fishing?

Gold price dropped 1.4% last week as US Fed rhetoric remained hawkish. Opportunity for bottom fishing?

Gold rate today: Geopolitical tensions in the Middle East and the US government revising last year's inflation figures may support gold prices in the near term, believe experts

Gold rate today: The US dollar's resilience and expectations of stimulus ahead of the US presidential elections are putting pressure on gold prices, say experts.

Gold rate today: On account of hawkish rhetoric from various US Fed officials and the resilience of the US dollar index on stimulus buzz ahead of the US presidential elections this year, gold prices continue to trade sideways for yet another week. In the week gone by, the gold futures contract on the Multi Commodity Exchange (MCX) for April 2024 expiry ended at 62,303 per 10 gm level whereas in the international market, the precious yellow metal finished at $2,024 per ounce.

According to commodity market experts, this decline in the gold price should not be a worry for the investors as support for the MCX gold rate today placed at the 61,500 level has remained sacrosanct for the entire week. This means a single trigger may fuel gold prices in the near term. They said that geopolitical tension in the Middle East is persisting and the US government revising last year's inflation figures should be taken as a hint of ease in the US Fed's monetary policy in the short term.

Also Read: Oil rises 1%, heads for weekly gain as Middle East conflict rages

Why is gold price trading sideways?

On triggers that pulled down gold prices last week, Sugandha Sachdeva, Founder of WealthWave Insights said, "Gold prices experienced a moderate decline of 1.42 percent over the past week, owing to the resilience of the dollar index and hawkish rhetoric from various Federal Reserve officials. The comments made by these officials tempered expectations for an imminent rate cut by the US Fed, as they emphasized the need for concrete evidence of inflation moderation before considering monetary easing measures. Consequently, the US dollar strengthened, buoyed by robust labor market indicators such as the initial claims data, reinforcing the perception that the US central bank will maintain higher interest rates for an extended duration. This sentiment exerted downward pressure on gold prices."

US presidential elections 2024 in focus

Speaking on the US dollar resilience putting gold price under pressure, Anuj Gupta, Head — Commodity & Currency at HDFC Securities said, "The US dollar is showcasing resilience these days as the market is expecting some stimulus ahead of the US presidential polls scheduled in November this year. Hence, there is a buzz about some stimulus package ahead of the beginning of US presidential poll proceedings. So, the resilience in the US dollar is expected to continue in the short term." However, Anuj Gupta of HDFC Securities advised gold and other bullion investors to remain vigilant about the US Fed officials' stance on the interest rate cut as the US government has revised last year's inflation figures.

Also Read: Jefferies downgrades ITC, slashes target price to 430

"The recent revisions to last year's inflation figures by the US government indicate that the US Fed will start easing monetary policy this year, which could be conducive for gold prices from a medium to long-term perspective," said Sugandha Sachdeva.

Gold price outlook

Asked about the gold price movement that one can expect in the short term, Sugandha Sachdeva said, "The precious metal traded within a narrow range throughout the week, but managed to find support around the crucial level of 61,500 to 61,450 per 10 gm, suggesting a positive outlook in the near term as long as this support zone holds firm. Furthermore, geopolitical tensions in the Middle East continue to underpin gold prices, contributing to its resilience amidst market uncertainties."

Also Read: Jana Small Finance Bank IPO subscribed 18 times on Day 3

Triggers for gold price in short term

On factors that may dictate gold price in the short term, Sugandha Sachdeva said, "Looking ahead to the upcoming week, market focus will be primarily directed towards the release of the US inflation data, which is expected to offer insights into the timing and magnitude of potential rate cuts by the Fed throughout the year. Depending on the outcome of this data, market sentiment towards gold may witness fluctuations as investors gauge the implications of monetary policy adjustments and their impact on the precious metal's prices."

Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Asit Manohar

Chief Content Producer at Live Mint Digital Team
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