Gold rate today: Yellow metal up on rising demand, US Fed rate cut hopes. Should you buy gold after recent price drop?

Gold rate on MCX traded higher on Monday tracking gains in international bullion prices, led by safe-haven demand. MCX gold prices have fallen more than 4% in the month of July so far and analysts believe the recent drop in prices can be a good opportunity to buy gold.

MCX gold rate was up by ₹249, or 0.37%, at ₹68,435 per 10 grams, while MCX silver price traded higher by ₹684, or 0.84%, at ₹82,055 per kg. In the international market commodity market, spot gold rose 0.4% to $2,394.88 per ounce, while US gold futures gained 0.5% to $2,393.20.

Gold prices in India fell last week due to customs duty cuts announced by the government in the Union Budget 2024 and concerns over demand in China. Better - than - expected US Q2 GDP and jobless claims data also exerted downward pressure on gold rates.

MCX gold rate was around ₹71,600 per 10 grams level in the beginning of July and hit a high of around ₹74,730 level during the mid-month. However, gold prices fell sharply after the Budget 2024 and hit a multi-month low of near ₹67,400 last week.

However, gold prices are expected to rise from here supported by short covering and certain global and domestic positive factors.

“Rising hopes of interest rate cuts by the US Federal Reserve, softness in US dollar index, escalation in global geopolitical tensions, and increase in physical demand in domestic markets after the duty adjustments are key factors that are supporting the yellow metal prices,” said Ajay Kedia, Director, Kedia Advisory.

Speaking on silver price, Kedia said there is pessimism in the silver market due to weak data from China. The Gold-Silver ratio has also increased sharply and is around 85 level, which shows gold is expected to outperform silver.

“Volatility in gold prices is likely to remain high. Yellow metal may find support at ₹67,000 and resistance is seen at ₹69,800 level. Support for silver is placed at ₹80,200 and it may face resistance at ₹85,600 level,” Kedia said.

Jigar Trivedi, Senior Research Analyst - Currencies & Commodities at Reliance Securities noted that MCX gold dropped by more than 4% so far in July, while on the other side, Comex gold is up approx 2.9%.

The week is important for the gold prices since a couple of global central banks, including the US Federal Reserve, are going to announce their monetary policies.

“The Fed is likely to hold rates steady as the market largely discounts a rate cut in September. BoJ is forecast to increase the rate and the Bank of England may cut the rate under the new government. The dollar index is struggling around the 104.30 mark. Moreover, the US will also come out with July non farm payrolls number. Hence from an economic data point of view, the week is crucial,” said Trivedi.

Having said this, the US has a major political event in November - Presidential Election. Lastly, since prices in India have fallen sharply amid basic import duty cuts, the festive time demand may emerge and provide support, Trivedi added.

He remains bullish on gold prices for the week and expects MCX August futures to rise to ₹69,200 per 10 grams in the week.

Technical View

Gold is showing a positive trend on the hourly timeframe, with prices consistently trading above the 50-period moving average. This upward movement indicates strong bullish momentum, suggesting that buyers are in control, according to Kedia.

He suggests traders should look for potential buying opportunities, as the price action continues to reflect strength and the possibility of further gains. Keep an eye on any pullbacks towards the 50 MA for possible entries, he said.

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