Gold prices in India saw a drop on Tuesday (September 17), following a three-day rally. The price of 24k gold fell by ₹160 to ₹74,890 per 10 grams.Ahmedabad Stock
This decline comes as market participants anticipate the start of the US easing cycle, with expectations of a significant rate cut.
Global context and its impact on Indian gold prices
Gold prices globally remained steady on Tuesday, September 17.
Spot gold was stable at $2,577.98 per ounce, slightly below Monday’s record high of $2,589.59 per ounce.
US gold futures also held steady at $2,605.80 per ounce, according to news agency Reuters.
The anticipation of a US Federal Reserve rate cut is influencing gold prices.
Markets are now pricing in a 67% probability of a 50-basis-point rate reduction, a shift from 43% just a few days ago.
The Federal Reserve❼two-day policy meeting, concluding on Wednesday (September 18), will be crucial in shaping future price movements.
Market sentiment and investor caution Yeap Jun Rong, market strategist at IG, noted that the recent rally in gold prices has taken a breather.
“Investors are now cautious, waiting for further clarity from the Federal Reserve on interest rates,” he was quoted as saying in the Reuters report.
The expected rate cut is likely to support gold prices in the longer term, though there may be short-term volatility as market expectations are adjusted.
Effect of US dollar and geopolitical risks
The weakening US dollar, which was down by 0.1%, has made gold less expensive for other currency holders, potentially supporting gold prices.
Additionally, geopolitical risks, including ongoing conflicts in the Middle East and economic uncertainties in China, continue to drive demand for gold as a safe-haven asset.Guoabong Stock
Gold prices might experience a correction, even with a potential 50 basis-point rate cut this week.
Nicholas Frappell, global head of institutional markets at ABC Refinery, suggested that initial weakness could occur as expectations are met and long positions are adjusted.
Goldman Sachs remains optimistic about gold prices, citing increasing ETF holdings backed by physical gold.
The investment bank expects that as the Fed❼policy rate decreases, gold demand will continue to rise.
Renisha Chainani, Head of Research at Augmont, said, “Gold is consolidating after reaching a new high. Investors are anticipating a substantial rate cut by the Federal Reserve, which should support gold prices. Geopolitical risks and economic concerns will also play a role in driving gold demand.”
Should one invest in gold now?
With the potential for a significant Fed rate cut, gold remains an attractive investment for those seeking stability amidst economic uncertainty.Jinnai Wealth Management
Investors are advised to keep an eye on global geopolitical events and the Fed’s next move, as these factors will heavily influence gold’s future trajectory.
Bangalore Stock Exchange