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Gold price trades flat ahead of US Fed meeting. Should you buy as Middle East crisis escalates?


Gold rate today: On account of the first estimate of the US GDP data beating the market estimates and the upcoming US Fed meeting on 30th January 2024, gold prices continue to remain range-bound through the week. MCX gold rate ended marginally lower at 61,950 per 10 gm level while spot gold price finished at around $2,018 per ounce level.

According to commodity market experts, higher-than-expected first estimates of the US GDP data have spoiled the yellow metal party despite the escalating Middle East crisis providing support to the precious metal. However, they advised investors to remain vigilant about the US Fed commentary and the possible rate cut signal. Experts maintained that the market is expecting a rate cut in March 2024 due to stronger US economic data.

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They said that the gold rate today is in the $2,000 to $2,050 per ounce range in the international market whereas on the MCX, the yellow metal is trading in 61,500 to 62,500 per 10 gm range. In case of any US Fed rate cut signal, spot gold price may go up to $2,080 to $2,100 levels whereas MCX gold rate may touch 63,000 and 63,500 levels in the near term.

What’s putting pressure on gold price rally?

On why gold price is trading range-bound despite escalating tension in the Middle East, Sugandha Sachdeva, Founder of WealthWave Insights said, “Gold prices closed marginally lower while oscillating in a narrow band during the week. The escalating tensions in the Middle East provided a floor to prices at lower levels and underpinned its safe-haven demand. Conversely, incoming data from the US economy have been robust, weighing on the precious metal. The US economy showcased resilience, with the first estimate of the fourth quarter of US GDP exceeding expectations at an impressive 3.3 per cent growth, surpassing the forecasted 2 per cent.”

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“The economic narrative unfolded further as the headline Personal Consumption Expenditure (PCE) price index matched consensus at 2.6%, while the core PCE exhibited a slight dip on an annual basis to 2.9 percent below forecasts. This suggests further moderation in inflationary pressures, potentially forming a premise for the US Fed to start easing policy. The upcoming policy meeting of the US Fed looms large on the horizon, serving as a focal point that could set the tone for the initiation of a rate-cut cycle, significantly impacting gold prices,” said Sugandha.

US Fed rate cut in focus

On expectations from the US Feeding meeting scheduled on 30th January next week, Anuj Gupta, Head — Commodity & Currency at HDFC Securities said, “Market is expecting rate cut signal in the US Fed meeting after better-then-expected US economic date, especially the first estimates of the US GDP coming higher than the market expectations. so, my suggestion to gold and other bullion investors is to remain vigilant about the US Fed’s commentary as the central bank of the US may keep interest rates steady in this meeting. In the US Fed’s commentary, we are expecting a rate cut signal in March 2024, which may support a gold price rally in the near term.”

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Important levels to look at

Anuj Gupta of HDFC Securities said that the gold rate today is in the $2,000 to $2,050 per ounce range whereas MCX gold rate today is in the 61,500 to 62,500 per 10 gm range. On breaching the upper hurdle, gold price in the international market may go up to $2,080 to $2,100 levels whereas MCX gold rate may move up to 63,000 and 63,500 per 10 gm levels.

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.

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