Gold is shining on Fed chair Powell’s comments – Is it the right time to invest?

Gold is glittering bright after a bullish trend was seen on the back of a dovish Fed outlook. On July 17, the Comex Gold reached an all-time high of $2,488.40 (Rs 74730) but later retreated due to profit booking.

The yellow metal is currently at 74,303 per ounce on MCX as of July 18. The rally in Gold is not expected to slow down in the near future as traders are anticipating the first rate cut in September, said Bhavika Patel, Senior Commodity and Currency Research Analyst at TradeBulls Securities. “We might see periodic profit bookings which will happen from time to time as prices are trading near lifetime highs.”

The US Federal Reserve’s chairperson Powell suggested that “the Fed was becoming increasingly confident that inflation was returning to goal, is supporting the gold rally,” said Renisha Chainani, Head of Research at Augmont – Gold For All. The market participant has discounted the Fed’s 25 basis points interest rate cut, which it is expected to reduce in September.

“In addition, market players anticipate that the US central bank will reduce borrowing prices once again in December as a result of decreasing inflationary pressures,” said Chainani.

Also, central banks are deliberately adding gold to their holdings to lessen their reliance on the dollar. According to a survey by WGC, around 20 central banks still want to raise gold, despite China’s current purchasing spree pausing.

Apart from that, the US Dollar index slipped to 103.72, its lowest since March 2024, while US Treasury yields declined as top Fed officials indicated that the central bank is “closer” to cutting interest rates, citing improved inflation and a balanced labour market.

“Investors will now look ahead to US weekly jobless claims data today to gauge the health of the labour market,” said Kaynat Chainwala, Assistant Vice President of Commodity Research at Kotak Securities.

Further, the price of silver struggled for momentum and tumbled 3.40% on concerns over China’s economic slowdown, which impacts the global market given China’s status as the world’s largest manufacturing hub, mentioned Chainwala of Kotak Securities in a research report.