Gold prices exhibited stability on the Multi Commodity Exchange (MCX) as they opened at Rs 65,932 per 10 grams on Tuesday, touching an intraday low of Rs 65,932. In the international market, the prices hovered around $2,179.08 per troy ounce. Simultaneously, silver commenced trading at Rs 74,459 per kg, reaching an intraday low of Rs 74,459 on the MCX, with the international market reflecting a price around $24.44 per troy ounce.
Manav Modi, Analyst at MOFSL, highlighted that gold prices steadied just below record highs, with the focus shifting towards upcoming U.S. inflation data. This data is anticipated to provide further cues on the Federal Reserve’s potential initiation of interest rate cuts. The recent surge in gold prices was driven by weak U.S. economic data, expectations of rate cuts, a decline in the dollar index and U.S. yields, coupled with increased speculative net long positions.
Modi also mentioned that hawkish comments from Fed officials have restrained gains on the higher side. Despite middling labor market data indicating a cooling in U.S. employment, bullion prices experienced positive momentum. The upcoming U.S. inflation data is closely monitored after signals from Fed officials, including Chairman Powell, emphasized concerns about sticky inflation as a significant factor influencing lower interest rates.
Analysts expect the inflation data for February to reveal a moderation in inflation, although remaining well above the Fed’s 2% annual target. Investors are particularly interested in this data as it could influence gold prices. Gold prices posted their best weekly gain of 4% last week, reaching a record high of Rs 66,300 in the domestic market. Investors are likely to closely follow the CPI data, and any hotter-than-expected inflation figures may trigger a correction in gold prices.
Ravindra Rao, Head of Commodity Research at Kotak Securities, noted that COMEX Gold prices rose for the eighth consecutive day due to signs of a slowdown in the U.S. economy, increasing the likelihood of a Fed pivot. This development has weighed down on the dollar index and treasury yields. Bloomberg forecasts suggest that U.S. CPI is expected to rise 0.4% month-on-month (3.1% year-on-year) in February, with core CPI expected to rise 0.3% month-on-month (3.7% year-on-year). A continued disinflationary trend might amplify rate cut expectations, positively impacting gold prices.
