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Gold interest rates drop ahead of Fed meeting. Is that an opportunity for bargain shoppers?


The gold rate today in the domestic and international markets is under the heat of profit taking. In the past week, the gold rate on MCX (Multi Commodity Exchange) depreciated 507 percent gm or 1 percent on Friday and ending at 50,230 levels while spot gold fell 1.07% to close at $1,644 per ounce.

According to commodity market experts, the dollar index rebounded after stronger-than-expected third-quarter US economic data sparked speculation that the Fed might change its stance on raising interest rates. Expectations of a US Fed rate hike held back the yellow metal in late trading and helped the dollar index recover from a one-month low. They suggest that spot gold price has a current support base at $1,630 while strong support is located at $1,600 per ounce while on MCX gold has a strong support base around 49,700 to 49,800 levels while it is facing resistance around 51,200 levels.

Commodity market experts went on to add that gold price today mainly driven by global indices and the outcome of the US Fed meeting will be the main driver for precious metal prices. They predict limited volatility in the yellow metal price range until the results of the US Fed meeting are made public.

Fed meeting

Speaking about the triggers, which are determining gold rates today, Anuj Gupta, Vice President – Research at IIFL Securities said, “Gold is expected to trade between $1630 to $1,685 until the outcome of the US Fed meeting, scheduled for next week, becomes Public.After more-than-expected third-quarter US economic data, the dollar index rebounded a bit. again, this is the main reason for the sharp drop in gold rate.” IIFL Securities’ Anuj Gupta went on to add that the MCX gold rate is expected to remain in the range. 49,700 to 51,200 levels until the results of the US Fed meeting on rate hikes are announced. “

Dollar Index Recovers

As for the reason gold fell today, Sugandha Sachdeva, Vice President – Commodity & Currency Research at the religious broker said, “The US economy recovered more than expected in the quarter. 3, which again provides a one-month dollar index fill.The US economy accelerated 2.6% year-on-year from July to September after two consecutive quarters of decline amid a backdrop the job market boomed and defied a backdrop of widespread inflationary pressures and steepening the pace of US Fed rate hikes.”

Strategy for Gold Investors

Suggesting gold investors keep an eye on the outcome of the US Fed meeting, Religious Broker Sugandha Sachdeva said, “All eyes will now be on the scheduled US Fed policy meeting”. ​next week, where markets have priced in another 0.75 percentage point rate hike Investors will, however, look for hints of a soft policy stance and a wave smaller rate hike at December meeting. Gold prices will also take cues from the key US jobs report for October due out next week.”

For short-term high-risk traders, IIFL Securities’ Anuj Gupta said that one can buy gold at current levels to Target 50,900 on 10 gm maintains stop loss at 50,100.

Gold price today: Pivot levels you should know

The religion’s expert thinks gold prices may struggle for a while but finds support at 49,700 to 49,800 per 10 gm zone and any decline towards the aforementioned support could be seen as a buying opportunity in the coming days. On the higher side, the level 51.050 above 10 gm will limit the rally and only a similarly convincing breach can propel the yellow metal further up.

Gold prices erased all gains seen in the last week to close in the 0.78% negative zone. Monthly, consolidation continues in the domestic market while in the international market it is the seventh consecutive loss month for the yellow metal. The main highlight was the broad-based drop in the dollar index in the first half of the week, which stoked risk sentiment and also supported gold prices. The dismal US housing market data has led to strong talk that the US Fed is likely to slow the pace of its rate hike campaign, sending the dollar index lower.

Disclaimer: The views and recommendations expressed above are those of individual analysts or brokerage firms, not those of Mint.

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