Gold rate today: Yellow metal climbs to a new peak on US Fed rate cut, weak US dollar. Experts see more upside

Gold rate today: After an aggressive US Fed rate cut of 50 bps, gold price witnessed a sharp upside rally last week as the US dollar rates came under pressure after this US Fed meeting outcome. Spot gold price peaked at 2,625 per troy ounce before the market closed on Friday. On MCX, the gold rate finished at ₹74,014 per 10 gm. According to commodity market experts, the euphoric rally in the precious yellow metal may continue as the US Fed Chair Jerome Powell and other US Fed officials have signalled two more US Fed rate cuts in 2024. They advised gold investors to accumulate gold on every big dip as the MCX gold rate may test resistance at ₹74,500 and anticipated some profit-booking around these levels.

Triggers for gold price

On why gold prices surged after the US Fed meeting, Sugandha Sachdeva, Founder of SS WealthStreet, said, "The euphoric rally in gold continues, with prices soaring to new record highs of $2,625 per ounce in international markets toward the end of the week. This surge is largely driven by the start of a monetary easing cycle in the US after four years, with the Federal Reserve's recent super-sized half-percentage-point rate cut renewing the appeal of gold. As US inflation approaches the Fed's 2% target, the central bank has hinted at an additional 50 basis point rate cut by the end of 2024, further propelling gold's upward momentum. Gold has been in an uptrend since Q4 2023, gaining over 27% year-to-date."

Other than the US Fed rate cut factors fueling the gold price today, Sugandha Sachdeva of SS WealthStreet said, "A weakening dollar, renewed tensions in the Middle East, and increasing inflows into global gold ETFs, particularly from Western countries, have further boosted gold prices."

Gold rate today: Change in trade pattern

Expecting the gold rush to continue further, Vaibhav Shah, Fund Manager at Torus Oro PMS, said, “We believe that bullish trend in gold will continue mainly on account of following: Rise in geopolitical tensions may lead to fresh allocation towards safe-haven assets like gold, deeper rate cutting cycle will lead to lower real rates and thus Gold will be a better option from an allocation perspective, lastly record gold buying by central bankers will keep the price momentum intact.”

Advising long-term investors to remain vigilant about every minute triggers, Alex Kuptsikevich, Senior Market Analyst at FxPro, said, "A fall in government bond yields increases interest in gold as an alternative to capital preservation, all other things being equal. This inverse correlation worked well last year but has started to fail this year and broke down this week when gold prices and yields started to rise simultaneously. If this is not a sign of a flight from dollar assets, gold may be nearing a peak."

"The forced liquidation of short positions may push the gold price higher into historical highs, as the US dollar generally holds its ground against a basket of major currencies, and rising bond yields create an unfavourable environment for gold," the FxPro expert said.

However, Sugandha Sachdeva of SS WealthStreet advised a buy-on-dips strategy: "Any correction in gold prices would offer a buying opportunity, and adopting a phased accumulation strategy could be prudent as domestic prices are likely to hit new record highs. Key support levels are ₹72,700 and ₹70,900 per 10 gm mark. For the week ahead, market participants will closely monitor US PCE and core PCE index data, which is the Fed's preferred inflation gauge, which could further influence gold's trajectory.

Gold price outlook

"The outlook remains positive, though prices may encounter resistance around ₹74,500 per 10 gm, with some potential for profit-taking. In international markets, gold faces key resistance at $2,680 per ounce level, with support pegged at $2,540 and $2,470 per ounce," said Sugandha Sachdeva.

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.