The February 2024 expiry price of the MCX gold rate future was ₹77,130 per 10 gm, ₹2,645 below the peak of ₹79,775 per 10 gm.
Today's gold rate: Following the profit-booking trigger, the price of gold fell on Friday after reaching a five-week high. At ₹77,130 per 10 gm, the MCX gold rate for the February 2024 future expiry was ₹2,645 below its all-time high of ₹79,775 per 10 gm. While the COMEX gold price concluded at 2,675 per troy ounce, the spot gold price on the global market ended at $2,648 per troy ounce.While spot gold prices reached a weekly high of $2,775 per ounce, the MCX gold rate tested a weekly high of ₹79,120 per 10 gm, according to commodity market specialists. However, following the profit-booking trigger, it pulled back from this five-week peak.
What drove the price of gold to a five-week peak?
"Gold prices surged sharply earlier in the week, testing highs of ₹79,120 per 10 gm and $2,725 per ounce—just shy of record levels," Sugandha Sachdeva, Founder of SS WealothStreet, said when asked about the factors that drove gold prices this week. However, in the latter part of the week, they gave up much of the gains due to profit booking. News that China's central bank had resumed gold purchases after a six-month pause, which increased the metal's allure as a safe haven, and the US Federal Reserve's growing anticipation of additional monetary easing for the third time this year drove the first advance. The demand for gold was further increased by increased geopolitical tensions in Eastern Europe and the Middle East after the overthrow of the Syrian government.
IBJA Director Prithviraj Kothari pointed to the demand for safe havens, saying, "The price of gold is drawing some dip-buying." Fed rate cut bets, trade war concerns, and geopolitical dangers. Ukraine has launched US-provided missiles that are aimed at strategic points deep within Russian territory. Russian forces are drawing near Pokrovsk, a vital city in eastern Ukraine, following a month of intense fighting. This week, Israel announced that it would keep its troops in the Syrian territory it had taken until a new force was established that met its security needs and filled the vacuum created by the toppling of the Syrian government.
Focus on the US Fed rate decrease
"The US Fed may take a more cautious approach to lowering interest rates in the future, which is in line with views that US President Donald Trump's expansionary policies will increase inflation," said Prithviraj Kothari, managing director of RiddhiSiddhi Bullions, in reference to the US Fed meeting that is set for next week. If prospects of a less dovish Fed continue to push US Treasury bond yields and support the US dollar in holding onto its weekly gains to a new monthly peak, the lower-yielding yellow metal might be capped.
"Bets on an impending rate decrease by the US Fed at its next meeting were reinforced by the US CPI statistics for November. However, worries about sustained inflation were sparked by the release of better-than-expected US wholesale price data for November, which showed the PPI exceeding consensus predictions. According to Sugandha Sachdeva, this dampened gold optimism by raising the possibility that the Fed will halt rate cuts in early 2025, which would strengthen the dollar index and depress gold prices.
With attention turning to the US Fed's meeting results and its advice on interest rate decreases in 2025, the SS WealthStreet analyst predicted that gold prices would continue to be extremely volatile.
Prospects for the price of gold
"Bulls may try to test the all-time high of ₹79775, which was reached in October, over the next significant barrier, which is estimated to be around the ₹79,000 region," stated Prithviraj Kothari of IBJA, who anticipated that the safe-haven demands about the price of gold would persist. On the other hand, the ₹77,000 has developed into a powerful, instantaneous support. A clear breach below, nevertheless, might trigger technical selling and more losses in the direction of the ₹76,500 confluence.
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