Gold price: Despite the US Fed’s commitment to maintain a high-interest rate regime, gold prices concluded the past week with an increase of more than 0.75 percent. The gold futures contract on the Multi Commodity Exchange (MCX) for February 2024 expiry closed at ₹63,200 per 10 gm, marking a weekly gain of ₹1,250 per 10 gm compared to the previous Friday’s close of ₹61,950 per 10 gm. In the international market, the price of gold closed at $2,039 per ounce, registering a weekly gain of over $21 per ounce.
As per experts in the commodity market, the gold price showed resilience due to Middle East tension, despite reduced expectations of an interest rate cut in March 2024. The Red Sea crisis was cited as a factor boosting demand for gold as a safe haven. However, the strong US job data bolstered the US dollar, slowing down the surge in gold prices. The experts noted that the MCX gold rate is encountering resistance at the ₹63,200 level, while crucial support is positioned at the ₹61,500 level.
Reasons for the Gold Price Surge
Anuj Gupta, Head of Commodity & Currency at HDFC Securities, explained why the gold price experienced a rally despite reduced expectations of an interest rate cut in March 2024. He stated, “The precious yellow metal showed resilience even as hopes of an interest rate cut in March 2024 diminished following the US Fed meeting. A significant factor contributing to this resilience can be attributed to the Red Sea crisis.”
“During the week, geopolitical concerns in the Middle East significantly boosted the demand for gold as a safe-haven asset. However, towards the week’s end, gold saw a partial decline in its gains due to the strengthening US dollar and increasing treasury yields. This shift was triggered by the release of a robust January jobs report, which reported the addition of 353,000 jobs, exceeding both December 2023’s figures and the market’s anticipated 187,000 jobs. Furthermore, strong wage growth data suggested ongoing inflationary pressures, casting uncertainty on the potential for future rate cuts,” explained Sugandha Sachdeva, Founder of WealthWave Insights.
Gold Price Outlook
Regarding the near-term outlook for gold prices, Sugandha Sachdeva commented, “Analyzing the price action, it seems that gold has established a support level around ₹61,500 per 10 gm or $2,000 per ounce. However, it is encountering resistance at the ₹63,200 per 10 gm level. A sustained breakthrough above ₹63,200 per 10 gm could potentially lead to ongoing upward momentum, with the precious metal targeting the ₹63,800 per 10 gm or $2,080 per ounce level on the higher side.”
