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  • Gold price jumps as Jerome Powell's speech fuels US Fed rate cut buzz. Buy or wait?

    Wed May 15 2024

    The buzz around the US Fed rate cut, sparked by Jerome Powell's speech, has significantly influenced gold prices. This was evident in early morning deals on Wednesday, as gold futures contract on the Multi Commodity Exchange (MCX) for June 2024 expiry opened at an upside of 72,336 per 10 gm mark and quickly reached an intraday high of 72,444. This surge in gold prices mirrors a trend we've seen in recent years, with gold prices steadily increasing due to various economic factors. In the international market, spot gold price is hovering around $2,360 per ounce while the COMEX gold price is quoting around $2,365 per troy ounce.

    Insights from seasoned commodity market experts, who have a deep understanding of the gold market, suggest that gold prices are on the rise following Jerome Powell's positive outlook on the US economy in his speech on Tuesday. They attribute this to the buzz for the US Fed rate cut, which is the primary driver of the current gold price surge. The experts have identified strong support for MCX gold rate today at 71,900 mark, with a potential hurdle at 72,800 per 10 gm. However, they foresee a target of 73,200 per 10 gm once the yellow metal price overcomes the 72,800 hurdle.

    US Fed rate cut in focus

    Asked about the reason for the uptrend in the gold rate today, Anuj Gupta, Head of Commodity & Currency at HDFC Securities, said, "Gold prices are rising today after the US Fed chairman's positive outlook on the US economy in his speech delivered yesterday. This has triggered buzz for the US Fed rate cut, which is fueling the gold prices today."

    According to the Kotak Securities report, gold prices are on the rise today in anticipation of the US CPI data release, scheduled for 15th May 2024. This data release is expected to have a significant impact on gold prices.

    "Comex Gold steadies near $2363/oz ahead of US CPI figures, wherein underlying inflation probably moderated in April for the first time in six months. Compared with April 2023, the core CPI is projected to rise 3.6%, the smallest annual increase in three years," the Kotak Securities report said.

    Gold price outlook

    "The Overall outlook for the gold price is positive today. The MCX gold rate today has major support at 71,900, whereas it is facing a hurdle at 72,800. On breaching this hurdle, MCX gold rates may soon touch 73,200 per 10 gm. In the international market, spot gold price has made a strong base at $2,320 per ounce, and it may soon touch $2,380 and $2,400 per troy ounce," said Anuj Gupta of HDFC Securities.

    On the suggestion to gold investors, Anuj Gupta said, "Gold prices are expected to remain in an uptrend in the near term. So, one should maintain the buy-on-dips strategy in the intraday session."