August 21, 2024
New Delhi, India
Gold prices
Gold prices surged to a new all-time high on Tuesday, driven by a dovish stance from the US Federal Reserve and geopolitical tensions. The safe-haven metal remains strong, with investors watching for further cues on the Fed’s rate-cut path.
Gold Price Movement: On Wednesday, gold prices (XAU/USD) remained above the $2,500 psychological mark during the Asian session, closely tracking the record highs touched the previous day. The market is buoyed by expectations that the Federal Reserve will begin its policy easing cycle with a 25 basis points cut in September, lending significant support to the non-yielding yellow metal.
Geopolitical and Economic Factors: In addition to Fed rate-cut optimism, ongoing geopolitical risks, China’s economic challenges, and a slight dip in global risk sentiment have bolstered gold prices. However, hopes for a ceasefire in Gaza and a modest rebound in the US dollar, which recently hit its lowest level since January, have somewhat capped gains.
Cautious Trading Ahead of Key Events: Traders are now awaiting the release of the July FOMC meeting minutes and Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium on Friday for more insight into the future policy path. These events are expected to significantly influence near-term USD price dynamics and provide fresh momentum to gold prices.
Market Sentiment: The market is pricing in a strong likelihood of a 25 basis points rate cut at the September FOMC meeting, with CME Group’s FedWatch Tool showing over a 70% chance. A Reuters poll also suggests that most economists expect the Fed to cut rates by 25 bps at each of the remaining three meetings of 2024, one more reduction than previously anticipated.
China’s Influence on Gold Demand: China’s role in gold demand is also noteworthy. The People’s Bank of China (PBOC) recently granted new gold import quotas to several banks, signaling potential for a new wave of Chinese gold buying. Additionally, holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, reached their highest in seven months, indicating growing financial investment demand.
MCX Gold and Silver Performance: Tracking the international bullion market, MCX Gold traded 0.28% higher at ₹71,979 per 10 grams on Wednesday, while MCX Silver rose 0.21% to ₹84,912 per kilogram. Despite a modest pullback, international gold prices remained near record highs, with spot gold trading at $2,517.38 per ounce, following Tuesday’s peak of $2,531.60. US gold futures also climbed by 0.2% to $2,555.20. Gold prices have increased by about $460, or 22%, so far this year.
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