Gold rate today: Will US Fed rate cut buzz, weak US dollar bolster gold prices? — explained

Gold rate today: After US Fed Chairman Jerome Powell's speech at the Jackson Hole Symposium, gold prices witnessed a strong rally across bourses on Friday. On the Multi Commodity Exchange (MCX), gold rates surged to an intraday high of ₹71,940 per 10 gm, recording around one per cent rise against the intraday low of ₹71,302, as the US Fed Chair signalled a US Fed rate cut in the September US Fed meeting.

According to the commodity market experts, US Fed minutes and Jerome Powell's speech at the Jackson Hole meeting have reinforced the probability of a rate cut in the US Fed meeting. Hence, gold prices are expected to witness a sharp rise on Monday. However, they maintained that the MCX gold rate today is facing a hurdle at the ₹72,300 mark. They advised a buy-on-dips strategy as overall sentiment for the precious yellow metal has become bullish. The US dollar rates have touched a seven-month low after Powell's dovish stance on interest rates.

US Fed rate cut buzz

Speaking on the outlook for gold price today, Sugandha Sachdeva, Founder of SS WealthStreet, said, "Gold prices soared to a new record high of $2,531 per ounce in the international market this week, fueled by increasing expectations of the start of the monetary easing cycle in the US next month. The release of recent Fed minutes reinforced the probability of a 25 basis points rate cut in September. Besides, a key highlight of the week was Fed Chair Jerome Powell's speech at the Jackson Hole symposium, where he maintained a dovish stance, signalling that the long-awaited rate cuts are imminent. While the market had anticipated a 25 bps cut, Powell hinted at the possibility of a more substantial reduction at the next meeting, citing easing inflationary pressures and signs of weakness in the labour market."

Retracement in US dollar rates

"Moreover, a weakening dollar index, which has dropped to a seven-month low, has further supported demand for gold. Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose to 859 tons in July, the highest in seven months, reflecting renewed investment interest," Sugandha added.

"This anticipation of lower borrowing costs have driven strong buying interest in gold, as lower interest rates typically decrease the opportunity cost of holding gold, a non-interest-bearing asset, making it more attractive to investors," said Sugandha Sachdeva of SS WealthStreet.

Gold rate today: Important levels to watch

On the outlook for gold prices in the near term, Sugandha Sachdeva said, “In the domestic market, gold prices are currently facing short-term resistance at the Rs. 72,300 per 10 gm level after the recent rally. A decisive move above this level could propel prices toward the ₹73,500 per 10 gm mark in the coming days. On the downside, support for gold is seen at the ₹70,500 per 10 gm level.”

Gold price target in 2025

Expecting the end of the high interest rate regime and the beginning of a low interest rate regime, Anuj Gupta, Head of Commodity & Currency at HDFC Securities, said, "Gold investors are advised to buy and hold for medium to long-term as September US Fed rate cut would be the end of high interest rate regime in the global economy. If the US Fed announced a rate cut in September, it would begin a low interest rate regime lasting at least six to nine months. So, gold prices are expected to remain an ideal 'buy-on-dips' asset for the medium to long-term."

Speaking on the gold price target in 2025, Jonathan Rose, CEO of Genesis Gold Group, said, "We are seeing the market already factoring in a September interest rate cut (25bps) and reacting positively with financial and gold gains. Historically, rate cuts have been good for gold prices; however, in the last few years, it has continued to climb, as we see new highs daily. Gold is reacting stellar due to domestic and international market instability, and we are forecasting that in 2025, it will hit $3,000 an ounce."

Disclaimer: 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.