September 27, 2024
New Delhi, India
Gold Prices
The Gold price (XAU/USD) faced some selling pressure on Friday, retreating from its record high near the $2,686 mark reached on Thursday. The decline was largely driven by a modest pickup in USD demand, which typically weighs on the price of the precious metal. Additionally, a risk-on mood spurred by China’s new stimulus measures diverted flows away from safe-haven assets like gold.
Key Factors Affecting Gold Price:
- USD Demand: A recovery in the US Dollar undermined gold demand, causing the metal to pull back from its peak.
- China’s Stimulus: The People’s Bank of China (PBOC) lowered the seven-day repo rate to 1.5% and reduced the Reserve Requirement Ratio (RRR) by 50 basis points to boost economic activity, adding to the risk-on rally.
- Overbought Conditions: After the sharp rise, technical overbought conditions contributed to the metal’s pullback.
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Outlook: US PCE Index and Fed Rate Cut Expectations
Despite Friday’s pullback, the overall bullish bias in gold remains intact. Traders are awaiting the release of the US Personal Consumption Expenditure (PCE) Price Index, a key Fed inflation gauge, which could provide further direction for the metal.
Market participants also anticipate a 50 basis point rate cut from the Federal Reserve at its November policy meeting, with the CME Group’s FedWatch Tool indicating a greater than 50% probability. This outlook for aggressive policy easing is likely to support the metal’s price in the near term, limiting potential losses.
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Geopolitical Tensions Support Safe-Haven Demand
In addition, the ongoing risk of geopolitical tensions in the Middle East could reignite safe-haven demand for gold, offering further support. This factor, combined with expectations of a Fed rate cut, is helping the metal remain on track for a third consecutive week of gains.
Gold prices may face temporary headwinds from USD strength and improving market sentiment due to global stimulus measures, particularly from China. However, the potential for Fed policy easing, coupled with geopolitical risks, continues to provide upside potential for the metal as traders await key US inflation data.
Gold Price(XAUUSD) was trading at $ 2,665.675USD up +8.680 or +0.33% at 1:32 P.M IST.
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