Gold prices witnessed significant gains in the morning trade in the domestic futures market on Friday, September 13, tracking positive global cues and weakness in the US dollar.
Comex gold jumped to record highs of $2,598.30 per troy ounce as the dollar fell to a one-week low amid optimism for a US Fed interest rate cut next week.
Interest rate cuts and a weak US dollar are both positive triggers for gold prices.
Since gold is priced in dollars internationally, when the value of the US currency falls, gold becomes cheaper for buyers in other currencies. This increases global demand for gold and pushes its price higher.
On the other hand, when the US Federal Reserve reduces interest rates, it affects the returns of interest-bearing assets like bonds and savings accounts. While gold is not an interest-bearing asset, the opportunity cost of holding gold declines due to Fed rate cuts, which increases the demand for yellow metals and, ultimately, price.
Investors' focus is now on the next week's US Federal Reserve meeting on September 18. The recent macroeconomic prints have indicated some weakness in the US economy while inflation has eased.
Meanwhile, the European Central Bank (ECB) cut rates for the second time this year on Thursday by 25 bps and lowered its 2024 growth forecast to 0.8 per cent from an earlier projection of 0.9 per cent.
MCX Gold traded 0.51 per cent higher at ₹73,194 per 10 grams around 9:45 am.
Experts appear largely positive about the gold's prospects for today's session.
Manoj Kumar Jain of Prithvifinmart Commodity Research expects gold and silver prices to trade with positive bias today amid weakness in the dollar index and a rebound in crude oil prices.
"Gold has support at $2,558-2,544, while resistance at $2,600-2,622 per troy ounce and silver has support at $29.74-29.40, while resistance is at $30.44-30.74 per troy ounce in today’s session," said Jain.
"On the MCX, gold has support at ₹72,550-72,270 and resistance at ₹73,050-73,300, while silver has support at ₹86,300-85,500 and resistance at ₹87,750-88,400," Jain said.
Jain suggests buying gold on dips around ₹72,550 with a stop loss of ₹72,250 for the target of ₹73,100.
Rahul Kalantri, VP of commodities at Mehta Equities, underscored that the recent US inflation and jobless claims data suggest the Fed may implement larger rate cuts in future policy meetings, which could further support gold and silver prices.
"Gold currently has support at $2,530-$2,510, with resistance at $2,572-$2,585. Silver has support at $29.65-$29.40 and resistance at $30.20-$30.50. In INR terms, gold is supported at ₹72,610- ₹72,450, with resistance at ₹72,990- ₹73,250. Silver has support at ₹86,370- ₹85,750, while resistance is at ₹87,850- ₹88,550," said Kalantri.
According to brokerage firm SMC Global Securities, gold may trade in the range of ₹72,700-73,200, and silver may trade in the range of ₹86,700-87,900, with sideways to bullish bias.
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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.
