Gold’s rally experienced a pause on Thursday, with prices opening lower after a series of sharp gains, as the U.S. dollar softened in the wake of the Federal Reserve’s rate cut. On the Multi Commodity Exchange, gold October futures commenced at Rs 1,09,303 per 10 grams, reflecting a decline of Rs 519 or 0.47%. Additionally, silver December futures contracts experienced profit booking, opening lower by Rs 581 or 0.46% at Rs 1,26,403/kg.
The Federal Reserve lowered interest rates by 25 basis points on Wednesday, signaling a commitment to gradually decrease borrowing costs throughout the remainder of the year. Fed Chair Jerome Powell described the policy action as a risk-management cut in response to the deteriorating labor market, indicating that the central bank is assessing the outlook for interest rates on a “meeting-by-meeting” basis. In the international market, gold prices continued to decline on Thursday, influenced by a strengthening dollar following the U.S. Federal Reserve’s anticipated decision to reduce interest rates by a quarter of a percentage point, accompanied by a cautious stance on future policy adjustments. On Wednesday, gold and silver concluded the trading session on a weaker note in both the domestic and international markets. The October futures contract for gold concluded at Rs 1,09,822 per 10 grams, reflecting a decline of 0.30%. Meanwhile, the December futures contract for silver settled at Rs 1,26,984 per kilogram, marking a decrease of 1.43%.
Gold and silver exhibit significant price volatility, experiencing substantial sell-offs during the early trading session; however, prices rebounded from their lows following the Federal Reserve’s rate cuts. Additionally, it is noteworthy that Marico and IEX are among eight futures and options stocks that experienced a significant rise in open interest in futures. The U.S. Federal Reserve has reduced its key interest rate by 25 basis points, bringing it down to 4.25%. In the wake of the Fed’s announcement, the dollar index experienced a decline, reaching its lowest point since February 2022, before subsequently recovering from the day’s lows. The U.S. Federal Reserve indicated that recent indicators suggest a moderation in economic activity during the first half of the year. Job growth has decelerated, and although the unemployment rate has experienced a minor increase, it continues to be at a low level. Inflation has risen and remains persistently high. The U.S. Federal Reserve has reduced interest rates in alignment with market anticipations and has indicated the possibility of further reductions later this year. Gold and silver prices are anticipated to exhibit volatility this week, influenced by fluctuations in the dollar index and speculation regarding potential rate cuts from the U.S. Federal Reserve this year.
Gold is projected to trade within a range of $3,534 to $3,800 per troy ounce, while silver is expected to fluctuate between $41.40 and $44.50 per troy ounce this week. Gold prices have increased by 39% this year, building on a 27% rise in 2024, driven by anticipations of monetary policy easing by the Fed, ongoing geopolitical tensions, and robust central bank purchases. Today, the US Dollar Index was hovering near the 96.99 mark, gaining 0.12%.