Gold prices end five-week rally on ease in Iran-Israel conflict, dent in US Fed rate cut buzz

According to commodity market experts, MCX gold rate today is below the crucial ₹72,300 per 10 gm level and now gold rates today have strong support placed at ₹70,500 per 10 gm mark. In the international market, they said that gold price today has important support placed at $2,300 per troy ounce level. They said that gold prices have the potential to bounce back from key support levels in the domestic and the international market but US dollar rates will be the key as the US dollar index has regained the psychological 106 level after some profit-booking trigger.

Dent to US Fed rate cut buzz

Highlighting the reasons that are responsible for the gold price dip, Sugandha Sachdeva, Founder of SS WealthStreet said, “Gold’s five-week winning streak came to a halt as the precious metal witnessed profit booking after reaching record highs. The primary reason behind this decline has been the receding geopolitical risks in the Middle East, which has reduced demand for gold as a safe-haven asset. Additionally, while the US economy slowed more than expected in the first quarter, the core PCE price index (a key inflation barometer) for March exceeded estimates on an annualized basis, dampening expectations for an early US Fed rate cut and limiting gold’s upside potential. Higher interest rates reduce the attractiveness of non-yielding assets like gold.”

US dollar rate in focus

On other reasons that put brakes on gold prices rally, Anuj Gupta, Head of Commodity & Currency at HDFC Securities said, “Gold prices came under pressure after bounce back in the US dollar rates and US treasury yields. This has happened after the disappointing US economic condition in the first quarter of the current financial year. The US expected to slow down more than the market estimates, which put a dent in the US Fed rate cut in the near term. This led to profit-booking trigger in the bullion market as investors are swapping positions from precious metals to currency and bonds.”

“In the Indian market, gold prices breached the crucial ₹72,300 per 10 gm support level and witnessed a sharp drop during the early part of the week. However, the metal stabilized later and has been able to establish short-term support near ₹70,500 per 10 grams or $2,300 per ounce mark, which could lead to a price rebound,” said Sugandha Sachdeva of SS WealthStreet.

Gold price outlook

Speaking on the gold price outlook for the short term, Sugandha Sachdeva said, “Despite the potential for a bounce back, gold price today remains susceptible to further declines due to the strength of the dollar index and waning geopolitical risk premium. Looking ahead, a clear break below current support levels could lead to an extension of corrective decline towards key support levels of around $2,260 and then $2,225 per ounce or ₹68,200 per 10 grams from a near to medium-term perspective.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 27 Apr 2024, 07:18 AM IST