Gold prices surged on Thursday morning, driven by speculation about a potential rate cut by the U.S. Federal Reserve, following soft U.S. core inflation data. The February 2025 gold futures contract on the Multi Commodity Exchange (MCX) opened flat at ₹78,700 per 10 grams and quickly climbed to an intraday high of ₹78,956, marking a new year-to-date (YTD) high for the MCX gold rate.
Global Market Overview
In the international markets, spot gold hovered around $2,693 per ounce, while COMEX gold was priced at approximately $2,723 per troy ounce.
Factors Driving Gold Prices Higher
Market experts attributed the rise in gold prices to softer U.S. core inflation data, which has fueled renewed speculation about a potential U.S. Federal Reserve rate cut at its upcoming meeting at the end of this month. Despite the Israel-Hamas ceasefire, gold prices have continued to climb, signaling strong market expectations of a rate cut, which could reduce the opportunity cost of holding non-yielding assets like gold.
Jigar Trivedi, Senior Research Analyst at Reliance Securities, noted that the slowing core inflation in the U.S. raised hopes for a less restrictive Fed policy this year. He added that the unexpected slowdown in core inflation, coupled with no significant surprises in headline consumer prices, supported bullion demand. Progress in disinflation could prompt the Federal Open Market Committee (FOMC) to ease monetary policy, further boosting gold’s appeal.
Gold Price Outlook
Anuj Gupta, Head of Commodity & Currency at HDFC Securities, expects gold prices to remain in a sideways to positive trend. He noted that gold is likely to stay within a range of ₹78,000 to ₹79,000 per 10 grams until U.S. President Donald Trump’s inauguration on January 20, 2025. Gupta suggested that the market will be closely watching comments from the Trump administration, particularly regarding the Israel-Hamas ceasefire.
Gupta recommended maintaining a stop loss at ₹78,400 for those with existing positions. If gold prices close above ₹79,000 before Trump’s inauguration, the yellow metal could rise to ₹79,500. On the downside, Gupta advised buying gold around ₹78,200, with a stop loss at ₹77,850.
International Market Levels
In the global market, spot gold is expected to range between $2,660 and $2,700 per ounce. If gold closes above $2,700, the next target could be $2,730 per ounce.
Conclusion
Gold prices continue to rise as markets focus on potential U.S. Federal Reserve rate cuts, fueled by soft inflation data. With the geopolitical situation and the upcoming U.S. presidential inauguration influencing market sentiment, gold remains a strong contender as a hedge against economic uncertainties.