The opening bell on the Multi Commodity Exchange (MCX) witnessed gold prices commencing at Rs 63,000 per 10 grams on Thursday, with an intraday low recorded at Rs 62,146. Simultaneously, in the international market, gold prices hovered around $2,033.25 per troy ounce. Correspondingly, silver opened at Rs 72,080 per kg on the MCX, reaching an intraday low of Rs 71,915, while the international market saw silver prices around $22.97 per troy ounce.
Manav Modi, an Analyst specializing in Commodity and Currency at MOFSL, remarked, “Gold prices traded steadily, retaining most of their losses from the previous week as investors questioned bets on early interest rate cuts by the Federal Reserve.”
Traders have been gradually reducing their bets on the Federal Reserve trimming interest rates as early as March 2024, leading to significant gains in the dollar. Anticipation surrounds the upcoming release of US Consumer Price Index (CPI) data, expected to reveal a slight uptick in inflation for December.
Sticky inflation, coupled with recent indicators of resilience in the labor market, provides the Federal Reserve with more flexibility to maintain higher interest rates for an extended period, influencing precious metal prices. While the Fed has indicated a potential rate cut in 2024, the exact timing remains uncertain.
Manav Modi added, “The central bank has maintained a largely data-driven approach to trimming interest rates. Fed officials were also seen pushing back against expectations for early rate cuts. Atlanta Fed President Ralph Bostic stated that he remained biased towards monetary policy remaining tight in the near term.”
Anuj Gupta, Head of Commodity and Currency at HDFC Securities, noted, “Yesterday, gold prices closed with a negative note down by 0.29% and closed at 61996 levels. Silver prices corrected by 0.11% and closed at 71969 levels. We have noticed that the dollar index recovered from lower levels after FOMC minutes stated that the time is yet not confirmed when interest rates will start to be cut. We also see thin physical demand for gold & silver in the physical market.”
