Gold prices remained under pressure today, with the MCX gold rate opening flat after a three-week rise. The February 2025 gold futures contract on the Multi Commodity Exchange opened lower at ₹78,259 per 10 gm but soon gained some upside momentum, reaching ₹78,400 per 10 gm—just ₹23 away from Friday’s close of ₹78,423. In the international market, spot gold oscillated around $2,687.56 per ounce, while the COMEX gold price was around $2,715 per troy ounce.
Factors Affecting Gold Price Today
The weakness in gold prices can be attributed to two key factors: soaring US dollar rates and the buzz surrounding slower US Federal Reserve rate cuts after the release of the December 2024 US Fed meeting minutes.
Anuj Gupta, Head of Commodity & Currency at HDFC Securities, explained that the rising US dollar and expectations for a slower pace of rate cuts by the Fed are pressuring gold prices. However, he remains optimistic about gold’s overall trend, suggesting that investors should view any significant dips as a buying opportunity.
Focus on US Fed Rate Cuts
Suganda Sachdeva, Founder of SS WealthStreet, highlighted that the December 2024 minutes from the US Federal Reserve signaled a preference for slower rate reductions in 2025, due to persistent inflation and a strong labor market in the US economy. Additionally, the US dollar index has continued its rally, reaching a high of 109.96, which typically poses a challenge for gold prices. The stronger-than-expected US Non-Farm Payrolls data for December further supports the notion of a prolonged pause in rate cuts by the Fed.
Gold Price Outlook
Despite the current dip, Anuj Gupta of HDFC Securities expects a rebound in gold prices, driven by two factors: the weakness of the Indian Rupee (INR) against the US dollar and economic uncertainties surrounding US President-elect Donald Trump’s inauguration on January 20, 2025. He recommended that gold investors adopt a buy-on-dips strategy.
Suganda Sachdeva pointed out that gold has established solid support around the ₹76,500 to ₹76,000 per 10 gm zone, with prices trending higher. She noted that, while the overall outlook remains positive, the three-week rally suggests the possibility of a short-term correction, which could attract fresh buying interest. For the near term, ₹78,800 per 10 gm remains a crucial resistance level. A breakout above this level could lead to further upside momentum, though potential pullbacks or consolidations may present opportunities for accumulation.
Conclusion
While gold prices are facing pressure today due to the rising US dollar and expectations of slower US Fed rate cuts, the overall outlook for gold remains positive. Factors such as the weakness of the Indian Rupee and potential economic uncertainties in the US suggest that gold may experience a rebound. Investors should remain cautious of short-term corrections but look for opportunities to accumulate gold at lower levels.