Gold prices drop as US Data and Fed rate cut speculation impact market

Gold prices fell in early trading on Monday, September 2, reflecting a sluggish global trend.

As investors await key economic data from the US, including the Federal Reserve’s upcoming policy meeting, gold futures on the domestic market mirrored the same lackluster trend.

Around 9.10 a.m. Indian time, MCX Gold for October delivery was trading 0.23% lower at Rs 71,448 per 10 grams.

What to watch out for

This week, gold prices will be influenced by several US economic reports, such as non-farm payrolls, JOLTS job openings, and ISM surveys. 

Domestically, the movement of the dollar against the rupee and demand from the spot market will also impact MCX Gold prices.

Experts suggest that gold prices have already factored in a potential rate cut by the Fed in September and lack fresh triggers to drive prices higher.

However, increased festive demand in India and a deeper-than-expected rate cut could push gold prices up.

Mohammed Imran, a research analyst at Sharekhan by BNP Paribas, notes that the overall trend for gold remains positive due to lower interest rates and ongoing geopolitical tensions.

Market strategy for MCX gold

US consumer spending increased by 0.5% in July, surpassing expectations and impacting gold prices. The rise in spending has diminished prospects for a significant rate cut by the Fed this month.

The US personal consumption expenditures (PCE) price index rose by 0.2% in July, matching forecasts. Over the past year, the PCE price index increased by 2.5%, consistent with June’s figures.
Experts predict that gold prices will be subdued today.

"Gold is likely to trade between Rs 71,400 and Rs 71,800, while silver may range from Rs 84,900 to Rs 85,500, with a sideways to bearish bias," said SMC Global Securities, a brokerage firm.

Rahul Kalantri, VP of commodities at Mehta Equities, noted that gold prices have retreated from record highs and silver is struggling to maintain levels above $30 per troy ounce.

Nonetheless, geopolitical tensions and strong investment demand continue to support precious metal prices.

"Gold has support at $2,478-$2,461 and resistance at $2,512-$2,527. Silver's support is at $28.22-$28.10 with resistance at $28.70-$28.90. In INR terms, gold support is at Rs 71,450-RS 71,210 with resistance at Rs 71,950-Rs 72,140. Silver support is at Rs 82,750-Rs 82,150 with resistance at Rs 83,880-Rs 84,550," Kalantri added.

Gold prices in Kerala 

Reflecting global trends, the gold price (22 carat) in Kerala saw a dip with one gram gold trading down by Rs 25 to Rs 6,670 and sovereign (8 gram) price down by Rs 200 to Rs 53,360. 

This is the lowest price since August 20. In the last week, the price has decreased by 360 rupees. 

The price of 18 carat gold, which is used to make lightweight jewellery, has also fallen by Rs 15 per gram to Rs 5,530.

However, sovereign gold jewelery in Kerala today would cost Rs 57,762 including three percent GST nd hallmark charge (Rs 45+ 18% GST).

(By arrangement with livemint.com)