The gold market saw a significant surge today in response to disappointing US job data and growing speculation about a potential Federal Reserve interest rate cut. Early morning trading witnessed robust support for gold, with futures contracts on the Multi Commodity Exchange (MCX) for August 2024 reaching an intraday high of ₹73,378 per 10 grams, marking a notable increase from the opening price of ₹73,237 per 10 grams. In international markets, the Comex gold price hovered around $2,400 per troy ounce, while spot gold was approximately $2,380 per ounce.
Commodity market analysts attribute the rise in gold prices to the release of weak US job data on Thursday, which has intensified discussions about a possible rate cut by the US Federal Reserve at its upcoming meeting scheduled for September 2024. Furthermore, the US dollar rate experienced a dip to a two-month low, and US Treasury yields faced downward pressure. These factors not only contributed to the rally in gold prices but also present an enticing buying opportunity for investors looking to capitalize on market fluctuations.
Anuj Gupta, Head of Commodity & Currency at HDFC Securities, explained, “The surge in gold prices today is a global phenomenon, driven by the disappointing US job data released on Thursday. This has exerted downward pressure on US Treasury yields and the value of the US dollar, thereby fueling speculation about a potential rate cut by the US Federal Reserve.”
Saish Sandeep Sawant Dessai, Base Metal Analyst at Angel One, echoed these sentiments, stating, “Gold prices reached a two-week high on Thursday following the release of weaker-than-expected US jobs data, which has sparked speculation about a potential Federal Reserve interest rate cut later this year.”
Experts at Angel One emphasized the prevailing consensus among forecasters regarding expectations of a Federal Reserve interest rate reduction in September, with the possibility of further cuts later in the year, although there remains a notable risk of fewer cuts. This sentiment, grounded in extensive research and analysis, contrasts with fluctuating market expectations, which have oscillated between one and two anticipated cuts.
Looking ahead, Angel One experts foresee continued strength in gold prices amid expectations of potential interest rate cuts by the Federal Reserve in response to weak US jobs data. Anuj Gupta of HDFC Securities advised investors to adopt a buy-on-dips strategy, asserting, “The outlook for gold remains highly bullish following the release of weak US job data. With MCX gold prices ranging between ₹72,000 to ₹73,800, a breach of the upper hurdle could propel prices to around ₹74,500 per 10 grams. Similarly, in the international market, a breach of the immediate hurdle at $2,390 per ounce could see prices scaling to approximately $2,420 per ounce.”
