Gold Rate Today: Flat Opening Amid US Fed Meeting Cues -

Gold prices opened flat on Tuesday, reflecting cautious investor sentiment ahead of the US Federal Reserve meeting. The MCX gold futures contract for February 2024 expiry opened on a positive note at ₹77,090 per 10 gm and quickly surged to an intraday high of ₹77,199. However, profit booking pulled the gold price close to its previous close of ₹77,061 per 10 gm.

In the international market, spot gold traded at approximately $2,653 per ounce, while the COMEX gold price hovered around $2,670 per troy ounce. Analysts expect gold prices to remain largely range-bound as the US Federal Reserve’s policy decisions dominate global market sentiment this week.

US Fed Meeting and Its Impact on Gold Prices

The US Federal Reserve’s policy meeting began today, with its outcome anticipated on Wednesday. The meeting is significant as markets eagerly await any decision on the US interest rates. Gold prices are particularly sensitive to interest rate decisions since they directly impact the US dollar, a key driver for the yellow metal.

According to commodity experts, gold prices today are likely to follow the movement of the US dollar, which typically strengthens in a higher interest rate environment. Analysts said the market has already factored in a 25 basis points (bps) rate cut by the Fed, reducing expectations for a major surprise in the announcement.

Anuj Gupta, Head of Commodity & Currency at HDFC Securities, noted:

“Gold prices are expected to follow US dollar prices as the outcome of the US Fed meeting would have a direct impact on the American currency. As the market has already discounted a 25 bps interest rate cut by the American Central Bank, the FOMC meeting is expected to remain a non-event for the yellow metal and other precious metals.”

The likelihood of a larger rate cut is low, making the Fed meeting less eventful for the commodities market. Analysts believe that if the Fed decides to keep rates unchanged, gold prices may witness minor volatility. However, the general sentiment remains cautious, with traders closely watching the Fed’s forward guidance on future monetary policies.

Current Market Trends and Gold Price Volatility

Gold prices have been trading in a volatile range over the past few weeks. This trend reflects the impact of major global economic events, such as central bank meetings and inflation data releases. Investors are particularly cautious this week due to a series of critical events, including:

US Fed’s policy outlook (FOMC Meeting)
Personal Consumption Expenditure (PCE) Price Index data in the US
RBI meeting minutes
ECB policy updates
China’s monetary policy decisions

The combination of these economic indicators creates heightened uncertainty, which often drives short-term volatility in gold prices. Jateen Trivedi, VP Research Analyst at LKP Securities, commented:

“Gold traded within a volatile range, continuing last week’s up-and-down swings as markets brace for a series of major economic events. Amid these developments, gold is likely to trade between $2,645–$2,675 on Comex, with minor strength expected on dips. In MCX, the range is projected at ₹76,500 to ₹78,000.”

Gold’s safe-haven appeal remains intact, but its immediate direction depends on the Fed’s rate decision and subsequent comments regarding monetary policy. Any indication of dovishness from the Fed could trigger fresh buying interest, pushing gold prices higher.

Key Drivers Influencing Gold Prices

Several key factors are influencing gold prices this week:

US Federal Reserve Policy: Interest rate cuts generally weaken the US dollar, making gold more attractive for investors. Conversely, a delay or reduction in the expected rate cut could apply downward pressure on gold.
US Dollar Index (DXY): The US dollar index remains an important factor in gold price movements. A stronger dollar typically pushes gold prices down, while a weaker dollar provides support to the yellow metal.
Inflation Data: The upcoming PCE Price Index will offer insights into US inflation levels. If inflation continues to trend downward, it may encourage the Fed to ease monetary policy further, benefitting gold.
Global Economic Uncertainty: Central bank decisions in China and Europe, combined with geopolitical developments, contribute to risk sentiment in the market. Increased economic uncertainty often supports gold as a safe-haven asset.
Profit Booking: Gold prices have witnessed intermittent profit booking, especially when approaching resistance levels. Short-term corrections remain a common feature during periods of uncertainty.
Demand-Supply Dynamics: Seasonal demand, especially in key markets like India and China, also plays a role in determining gold prices. Indian gold imports typically surge during festive and wedding seasons.

Gold Price Outlook: Buy-on-Dips Strategy

Amid ongoing uncertainty, analysts recommend a buy-on-dips strategy for gold investors. Gold prices are expected to remain range-bound, offering opportunities for traders to accumulate positions at lower levels.

According to Jateen Trivedi:

“Gold is likely to trade between $2,645–$2,675 on Comex, with minor strength expected on dips. In MCX, the range is projected at ₹76,500 to ₹78,000 as traders navigate heightened uncertainty.”

The recommendation highlights the potential for gold to recover on any price corrections, particularly if economic data or Fed commentary signals softer monetary policy.

Key Support and Resistance Levels:

MCX Gold (February 2024):
- Support: ₹76,500
- Resistance: ₹78,000
COMEX Gold:
- Support: $2,645 per ounce
- Resistance: $2,675 per ounce

Impact of US Fed Decisions on Global Markets

The US Federal Reserve’s monetary policy decisions have far-reaching implications for global financial markets. For gold, in particular, the relationship with interest rates and the US dollar remains critical. Historically, a dovish Fed policy has resulted in:

Weaker US Dollar: Boosting gold prices due to its inverse relationship with the greenback.
Lower Bond Yields: Reducing the opportunity cost of holding non-yielding assets like gold.

If the Fed delivers a surprise rate cut or provides dovish commentary, gold prices could break above key resistance levels. On the other hand, any hawkish signals might cap gains and trigger short-term selling pressure.

Global Demand for Gold

Gold demand continues to remain robust, driven by both investment and consumer demand. Key factors supporting global demand include:

Central Bank Buying: Central banks, particularly in emerging markets, have been increasing gold reserves to hedge against currency risks and inflation.
Jewelry Demand: Major gold-consuming countries like India and China have witnessed a rise in demand during festive and wedding seasons.
Economic Uncertainty: Persistent concerns about global economic growth, inflation, and geopolitical tensions have strengthened gold’s role as a safe-haven asset.
Investment Demand: Exchange-Traded Funds (ETFs) and institutional investors continue to allocate funds to gold as a hedge against inflation and market volatility.

Conclusion: Gold Prices Likely to Stay Range-Bound

Gold prices opened flat ahead of the US Fed meeting, reflecting investor caution. Analysts expect prices to remain range-bound, with key support and resistance levels guiding short-term movements.

The Fed’s interest rate decision remains the primary driver for gold prices. While markets have already factored in a 25 bps rate cut, any dovish surprises could provide fresh momentum for gold. Conversely, hawkish signals may limit upside potential.

For traders, adopting a buy-on-dips strategy remains prudent, as gold’s long-term outlook continues to be supported by economic uncertainty and inflation concerns.

Gold Price Outlook: