Gold rate today: The gold price today has been significantly influenced by the rise in US dollar rates, a key factor in the current market dynamics. This increase in US dollar rates was primarily driven by better-than-expected US job data, which has had a direct impact on the gold price. Additionally, China’s pause in gold buying has further extended the selling streak. The gold futures contract for the August 2024 expiry on the Multi Commodity Exchange (MCX) opened with a downside gap at ₹71,149 per 10 gm and touched an intraday low of ₹70,927 within a few minutes of the commodity market’s opening bell. In the international market, spot gold price is oscillating around $2,295 per ounce whereas COMEX gold price is quoting 2,311 per troy ounce.
Triggers for gold price correction
Discussing the reasons for the gold rate today being under pressure, Praveen Singh, Associate VP of Fundamental Currencies and Commodities at Sharekhan by BNP Paribas, pointed out, “Spot gold plummeted on Friday as China, a major player in the gold market, paused gold buying in May. This, coupled with the robust US nonfarm payroll report of May, which defied expectations of a July rate cut, led to the metal hitting its highest level since May 22, gaining momentum on rate cut expectations following the Bank of Canada and the European Central Bank’s rate cuts.”
US dollar price strengthens
“The US Dollar Index rallied 0.70% to close at 104.93 on Friday. It was up 0.25% on the week. The ten-year US yields surged 3.28% at 4.43%; two-year US yields surged over 3% on Friday to close at 4.89%. As per the US nonfarm payroll report, the US employers added 272K jobs in May versus the forecast of 180K; the unemployment rate at 4% was above the forecast and the prior figure of 3.90%; however, average hourly earnings rose 0.4% m-o-m and 4% y-o-y, which were better than the respective forecasts of 0.30% and 3.90%.” said Praveen Singh.
US Fed rate cut in focus
Saish Sandeep Sawant Dessai, Analyst — Base Metal at Angel One, explained the gold price fall in the context of the US jobs report. He said, “The gold price fall is triggered by a stronger-than-expected US jobs report, a significant event that has dampened hopes for interest rate cuts this year. The robust jobs data led to a dollar rally, making gold more expensive for foreign buyers, despite earlier gains driven by weaker private payrolls data and expectations of a Federal Reserve rate cut.” The Angel One expert added that gold prices will likely continue declining, pressured by vital US jobs data and a halt in Chinese bullion purchases.
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