The gold market saw minimal movement today, following three consecutive weeks of gains. On Monday, the gold futures contract for February 2025 expiry on the Multi Commodity Exchange (MCX) opened lower at ₹78,259 per 10 grams. However, it quickly regained some ground, trading around ₹78,400 per 10 grams—just ₹23 below Friday’s close of ₹78,423. Meanwhile, in the international market, spot gold hovered around $2,687.56 per ounce, with COMEX gold priced at approximately $2,715 per troy ounce.
Factors Weighing on Gold Prices
Market experts attribute today’s muted performance to two primary factors: a surging U.S. dollar and a reduced likelihood of aggressive rate cuts by the U.S. Federal Reserve, following the release of the December 2024 meeting minutes.
Anuj Gupta, Head of Commodity & Currency at HDFC Securities, explained, “Gold prices are facing pressure today due to the strong U.S. dollar and the outlook for slower U.S. Fed rate cuts.” Despite this, he remains optimistic about gold’s long-term prospects, suggesting that any significant dips should be viewed as buying opportunities.
U.S. Federal Reserve Rate Cuts and Dollar Rally
Suganda Sachdeva, Founder of SS WealthStreet, pointed to the December meeting minutes from the U.S. Federal Reserve, which signaled a preference for a slower pace of rate cuts in 2025. The Fed’s cautious stance comes amid persistent inflation and a robust labor market in the U.S.
Additionally, the U.S. dollar index has continued its upward trend, reaching a high of 109.96, which traditionally puts downward pressure on gold prices. The stronger-than-expected U.S. Non-Farm Payrolls data for December has further bolstered expectations of a prolonged Fed pause on rate cuts.
Outlook for Gold Prices
Despite the current dip, Gupta forecasts a potential bounceback for gold prices, supported by two key factors: the weakening Indian Rupee (INR) against the U.S. dollar and growing economic uncertainties surrounding U.S. political events, notably the January 20, 2025 inauguration of Donald Trump. Gupta advises gold investors to adopt a buy-on-dips strategy.
Sachdeva also provided insights on the price outlook, noting that gold has established a solid support zone between ₹76,500 and ₹76,000 per 10 grams. While the recent three-week rally suggests the possibility of short-term corrections, these could trigger renewed buying interest.
In the near term, she highlighted ₹78,800 per 10 grams as a key resistance level. A breakout above this threshold could set the stage for further price gains, although she cautioned investors to watch for potential consolidation or pullbacks that could offer fresh buying opportunities.
Overall, the outlook for gold remains positive, though market conditions suggest a cautious approach in the short term.
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