Gold price jumps on easing US dollar rates after release of FOMC meeting minutes
- Gold price today: MCX gold rate opened upside at ₹86,420 per 10 gm and touched an intraday high of ₹86,494 within a few minutes of the Opening Bell
Gold rate today: After hitting a new peak of ₹86,549 per 10 gm during Wednesday evening deals, the precious yellow metal retraced as the US dollar witnessed some value buying ahead of the Closing Bell. However, in the Opening Bell on Thursday, the US dollar failed to sustain at higher levels, and the US Dollar Index slipped below the 107 mark and once again came close to its two-month low. This triggered the strong buying of precious bullion metal. MCX gold rate today opened upside at ₹86,420 per 10 gm and touched an intraday high of ₹86,494 within a few hours of the Opening Bell.
According to market experts, the US dollar's price eased during the morning session on Thursday, which triggered value buying in the precious yellow metal. They said that US Fed meeting minutes released has hinted that the US Central Bank is open to more than one interest rate cut, provided the inflation gets under control. This has put pressure on the US dollar rates, which has triggered buying in gold across bourses.
FOMC meeting minutes in focus
Pointing towards the US Fed's meeting minutes released overnight, Anuj Gupta, Head — Commodity & Currency at HDFC Securities, said, “The FOMC meeting minutes released overnight has hinted that the American Central Bank is open to more than one US Fed rate cut in 2025. This has triggered profit-booking in the US Dollar, leading to the US Dollar Index slipping below the 107 mark. This broke the US dollar rally at higher levels and spurred buying in the yellow metal on Thursday."
According to LSEG data, traders currently see at least one 25-basis-point rate cut and a 44% chance of an additional lowering by December.
Trump's tariff rant
Expecting the bull trend in gold prices to continue, Paul Wong, Market Strategist at Sprott Asset Management, said, “We are in a state of unusual-heightened uncertainty... the catalyst is the tariffs and trade talks or threats that are going on around the world.”
Trump said on Tuesday that he intends to impose auto tariffs "in the neighborhood of 25%"and similar duties on semiconductor and pharmaceutical imports.
This follows his recent move to impose a 10% tariff on Chinese imports and a 25% tariff on steel and aluminium earlier this month.
Bullion is seen as a safeguard against geopolitical risks and inflation, but rising interest rates diminish its attractiveness as a non-yielding asset.
Persisting safe-haven demand
Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities, said, "Persistent global uncertainty due to tariffs has reinforced gold’s status as a safe-haven asset, with banks and funds maintaining high allocations. The metal is expected to remain volatile within the ₹84,500 to ₹87,500 range in MCX as markets await the Federal Reserve and RBI meeting minutes, which will be key triggers for further price movements."
Gold price outlook
"Overall, the outlook for gold price is positive as MCX gold rate is expected to sustain above its crucial support at ₹85,500 per 10 gm,” said Anuj Gupta of HDFC Securities.
The outcome of FOMC meeting minutes
According to a Bloomberg report, US Federal Reserve officials remain cautious about adjusting interest rates, emphasizing the need for further progress on inflation before making any changes. Minutes from the Federal Open Market Committee’s (FOMC) January 28-29 meeting showed this.
“Participants indicated that provided the economy remained near maximum employment, they would want to see further progress on inflation before making additional adjustments to the target range for the federal funds rate,” the FOMC meeting minutes showed.
The minutes highlighted that “many participants noted that the committee could hold the policy rate at a restrictive level if the economy remained strong and inflation remained elevated.”
(With inputs from Reuters and Bloomberg)
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
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