Gold prices opened on the Multi Commodity Exchange (MCX) on Tuesday at Rs 62,240 per 10 grams and hit an intraday low of Rs 61,926. In the international market, prices hovered around $2,020.10 per troy ounce.
Meanwhile, silver opened at Rs 71,023 per kg and hit an intraday low of Rs 70,628 on the MCX. The price hovered around $22.73 per troy ounce in the international market.
Manav Modi, Analyst, Commodity and Currency, MOFSL, said, “Gold prices were stuck in a tight range as investors refrained from making big bets ahead of a US inflation report that could give a fresh perspective on how soon, and by how much, the Federal Reserve could cut interest rates this year.”
The dollar also remained in sight of a recent three-month high, weighing on gold prices. All eyes are on the January US consumer price index (CPI) data, which is due later in the day. The reading is expected to show that inflation eased further in January. However, price pressures are still expected to remain well above the Fed’s 2% annual target, giving the central bank more impetus to keep interest rates higher for longer.
The core CPI is also expected to have slowed its growth on a YoY basis in January to 3.7%, from 3.9% in the previous month. Along with the inflation data, a sting of Fed officials are expected to speak this week.
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“Fed officials are expected to reiterate recent comments that the central bank is in no hurry to begin trimming interest rates. Traders see about an 85% chance for a pause in March and a 50% probability of a Fed rate cut in May,” said Modi.
Jateen Trivedi, VP Research Analyst of LKP Securities, said, “The spotlight also turned to the fourth tranche of Sovereign Gold Bonds (SGB), which garnered investor attention. With stable returns fixed at 2.5%, investors were drawn to park their funds in gold, especially amidst prevailing uncertainties in the global and Indian markets. However, the current price of Rs 62,130 offered may seem unattractive to some investors, particularly considering the delayed hints of US rate cuts, which could potentially support a rise in the dollar and limit the upside for gold prices in the short term.”
Ravindra Rao, Head – Commodity Research at Kotak Securities, said, “COMEX Gold prices extended previous week’s declines and fell for the third consecutive day on Monday, tracking a stronger greenback and higher yields ahead of the much awaited US CPI data. Persistent ETF outflows are also adding pressure on gold prices. Federal Reserve Bank of Richmond President Thomas Barkin said on Monday that it’s premature to believe inflation pressures are over. According to Bloomberg forecasts, the headline US CPI is expected to ease to 2.9% in January (compared with 3.4% in December) to the lowest since April 2021, and the core CPI is also expected to ease to 3.7% in January (compared with 3.9% in December). Year on year CPI number below 3% might add to May rate cut bets, aiding bullions; however higher than consensus might boost the greenback.”