Gold price rallies amid growing expectations of US Fed rate cut

Gold prices climbed notably over the past week, with 24-carat gold rising by Rs 1,324 per 10 grams as investors sought safe-haven assets amid growing expectations of an interest rate reduction by the U.S. Federal Reserve. The commodity closed at Rs 1,26,666 per 10 grams compared to Rs 1,25,342 at Monday’s opening, according to data from the India Bullion and Jewellers Association (IBJA).

Market indicators show an 86.9% probability of the Fed lowering rates by 350-375 basis points in December—an increase from 71% just last week based on CME’s FedWatch Tool. Analysts observed gold retesting key resistance levels between $4,215 and $4,240, suggesting a decisive breakout above $4,240 could propel prices toward record highs of $4,400 (Rs 131,500). Conversely, a pullback might drive valuations toward $4,100 (Rs 123,000).

The precious metal faced pressure on Friday following the resolution of the U.S. government shutdown, which eased immediate economic concerns. Experts identified support levels for gold at Rs 1,25,750–1,24,980 per 10 grams, with resistance near Rs 1,27,750–1,28,400. Silver traded within a support band of Rs 1,60,950–1,59,400 per kg and resistance at Rs 1,63,850–1,64,900.

Market watchers anticipate subdued bullion performance in the near term unless fresh safe-haven demand emerges or the Federal Reserve signals a definitive policy shift. Recent analysis from Bank of America projects gold could rally to $5,000, citing macroeconomic factors like rising sovereign debt, persistent inflation, easing interest rates, and unconventional fiscal measures in the U.S. The institution also highlighted underweight institutional allocations despite the metal’s upward trajectory.

Additional factors influencing the outlook include moderating Chinese demand, supply bottlenecks in critical mined metals, and historically low global stockpiles.

(Inputs: IANS)