Gold prices surged by about 1 per cent, driven by investor speculation regarding potential interest rate cuts by the US Federal Reserve.
The Federal Reserve is expected to conclude its two-day policy meeting on Wednesday. While an immediate rate cut is not anticipated, there is speculation that the Fed might signal future reductions, possibly as early as September.
The US rate futures market has already priced in a September rate cut, which could reduce the cost of holding non-yielding gold, making it more attractive to investors.
Despite a 5 per cent decline in gold demand in Bharat during the June quarter compared to last year, global gold prices remain near record highs, enhanced by strong demand from Bharat.
The World Gold Council (WGC) anticipates an increase in gold consumption in the latter half of 2024. This expectation is due to a recent reduction in import taxes and favourable monsoon conditions. The gold import duty in Bharat was recently reduced from 15per cent to 6per cent, which is likely to boost retail demand and curb smuggling.
“Gold and silver prices surged later on Tuesday following news of Israel’s assault on Lebanon, pushing gold prices above $2,400 and silver above $28.20 in global markets,” said Rahul Kalantri, VP Commodities at Mehta Equities Ltd.
“Earlier in the day, gold prices had been stable despite strong US data indicating a tight jobs market. Market sentiment is mixed, but a drop in US Treasury bond yields and a weakening dollar have supported bullion prices as traders await the Federal Reserve’s decision on Wednesday.”
Kalantri added, “Investors are also watching for the upcoming ISM Manufacturing PMI and Nonfarm Payrolls report for July. Gold has support at $2,392-$2,378 and resistance at $2,420-$2,438. In INR, gold has support at Rs 68,310-Rs 68,050 and resistance at Rs 68,830-Rs 68,980. Silver has support at Rs 81,850-Rs 81,180 and resistance at Rs 82,290-Rs 82,800.”
Dr Renisha Chainani, Head of Research at Augmont – Gold For All, explained, “The reduction in gold import duty in India has led to a four-month low in local gold prices, spurring significant demand over the past week. As a result, the price premiums in India over official domestic rates have surged to $20/oz, the highest in 10 years. Last week’s low of $2,350 (Rs 67,400) will act as a short-term base, with gold rebounding towards $2,460 (Rs 69,000). The next resistance level is $2,475 (Rs 69,500) and the previous high of $2,488 (about Rs 70,000).”
Pranav Mer, Vice President, EBG – Commodity & Currency Research, JM Financial Services Ltd, noted, “Gold has steadily risen over the past four trading sessions and is trading close to $2,425 per ounce, supported by bargain buying above the $2,350 support level amid expectations of a demand rebound in India following the import tax cuts. The bullion remains supported by increasing bets on rate cuts by global central banks. Key events to watch include the US Fed’s policy meeting outcome and the US employment data on Friday.”
“Technically, gold holds support at Rs 69,050/Rs 68,550, while resistance is at Rs 69,950-Rs 70,100,” he concluded.
Considering these factors, investors should carefully evaluate market conditions before deciding to invest in gold.
