Despite the cut in interest rate by the US Federal Reserve on Wednesday, the gold prices fell after Jerome Powell indicated that the bank would not go for a series of rate cuts.
Despite the cut in interest rate by the US Federal Reserve on Wednesday, the gold prices fell after Jerome Powell indicated that the bank would not go for a series of rate cuts. Today, the gold prices fell 0.52 per cent to Rs 34,336 per 10 gram in futures trade tracking trend in overseas markets. On the Multi Commodity Exchange, gold for delivery in August contracts was trading down by Rs 181, or 0.52 per cent, to Rs 34,336 per 10 gram in a business turnover of 5,268 lots. Meanwhile, gold futures were trading lower at USD 1,418.10 an ounce, lower by 1.37 per cent in New York.
The bad monsoon, along with distress in the rural sector is also weighing down on gold prices, according to analysts. US Fed Chair remarks also triggered fall in gold prices as the further interest rate cuts are unlikely which is not positive for the yellow metal prices. However, from a long term perspective, analysts are bullish on gold prices.
“Interest rate cut of 0.25 per cent by US Federal Reserve was already expected and that had been discounted by the market, which led to profit booking. This fall in gold prices is temporary. Long term scenario is bullish on gold. US job data is also expected to be weak which will support the gold prices. This is a good opportunity to buy gold. Equity markets also down amid global slowdown,” Ajay Kedia, Director, Kedia Commodity told Financial Express Online.
With the recent increase in import duty on gold to 12.5% from 10%, gold prices are already near an all-time high in the domestic market. Moreover, subdued rural demand expectations in the coming months due to weak monsoon also doesn’t augur well for the gold prices. Hence, the gold demand is likely to remain dull going ahead. However, gold prices may continue to rally in the international market since Chinese and Russian central banks have bought gold due to rise in trade friction and geopolitical risk, Jigar Trivedi – Fundamental Analyst, Commodities, Anand Rathi Shares & Stock Brokers told Financial Express Online. Trivedi recommended going long on dips. On the MCX Rs 34,000 per 10 gram is good support and Rs. 35,900 is resistance, he added.
“Investors waiting on the sidelines to buy gold & silver can look for the current dip as a buying opportunity as the overall bias for bullion prices looks positive even now with gold likely to cross Rs.36000 level & silver likely to rally till Rs.43000 in domestic markets,” Amit Sajeja, Associate Vice President with Motilal Oswal Financial Services told Financial Express Online.