Gold prices opened on the Multi Commodity Exchange (MCX) on Thursday at Rs 61,932 per 10 grams and hit an intraday low of Rs 61,840. In the international market, prices hovered around $2,024.25 per troy ounce.
Meanwhile, silver opened at Rs 71,885 per kg and hit an intraday low of Rs 71,590 on the MCX. The price hovered around $22.78 per troy ounce in the international market.
Manav Modi, Analyst, Commodity and Currency, MOFSL, said, “Gold prices edged lower hovering in a narrow range, established over past week as markets grew more uncertain over U.S. interest rate cuts this year. The Dollar Index fell below the 103 mark initially in yesterday’s session but later bounced back amidst positive US economic data.”
While US 10Y Yield is hovering steadily around the 4.1% mark, showcasing the rising expectations for a delay in rate cuts this year. US preliminary manufacturing and services PMI was reported better than expected, supporting an up-move in the Dollar.
A strong U.S. economy and continuous comments from Fed officials favouring the delay in rate cuts are leading some investors to rethink their bets on how quickly the Fed will cut rates this year.
“CME Fed watch tool suggests that the market is expecting the Fed to keep interest rates unchanged at its January 30-31 policy meeting and has pushed back the timeframe of the first interest rate cut. Focus today will be on ECB monetary policy meeting, US Core durables goods orders and Q4 GDP data,” said Modi.
Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions Limited (RSBL), said, “Central Bank buying is the main factor supporting Gold prices to trade above $2000 in the last few months. Central banks worldwide have been buying gold with both hands for the last 2-3 years as they want to diversify their reserves out of Dollar to other asset classes.”
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On the other side the Reserve Bank of India has been actively buying around 40 tonnes of gold every year for the last six years. India now stands ninth in terms of gold reserves, with holdings of over 800 tonnes in 2023. “India’s central bank has surpassed the central banks of the Netherlands, Turkey, the UK, and Saudi Arabia in terms of gold reserves lately,” said Kothari.
Ravindra Rao, Head – Commodity Research at Kotak Securities, said, “Gold prices pared early gains and closed lower on Wednesday, as robust economic data from US prompted investors to pare March Fed rate cut wagers, which now stands at 41% compared with almost 70% a week ago. The greenback and treasury yields pared some early losses after data showed US factory activity unexpectedly jumped to 50.3 in January 2024, the highest since October 2022 Today, all eye are on the ECB policy meeting and a slew of economic data from the US, including US Q4 GDP estimates, weekly jobless claims and durable goods orders which might provide more cues on Fed’s policy path.”