Gold prices hold near record high as Fed rate cut bets, dollar weakness fuel rally. Analysts predict Rs 1.09 lakh target

Gold witnessed slight profit booking from their higher levels, but were sustaining near their all-time high levels. The gold October futures on MCX were trading lower by Rs 488 or 0.45% at Rs 1,07,240/10 grams. Gold prices hit an all-time high of Rs 1,07,807/10 g on Friday.

Further, silver December futures on MCX were also trading lower at Rs 124079/kg, having fallen by Rs 618 or 0.5%.

On Friday, gold and silver settled on a positive note in the domestic and international markets. Gold October futures contract settled at Rs 1,07,728 per 10 grams with a gain of 1.23% and silver December futures contract settled at Rs 1,24,697 per kilogram with a gain of 0.63%.

Gold and silver extended its gain last week, with gold prices surging to record high and silver prices also hitting a fresh 14-year high in the international markets.

The U.S. non-farm employment came at 22,000 against the expected jobs of 75,000. The U.S. unemployment rate also surged to 4.3% in August due to higher U.S. trade tariffs.

“The U.S. job data released last week was disappointing and increased possibilities of Fed rate cuts and supported both precious metals,” said Manoj Kumar Jain of Prithvifinmart Commodity Research.

Global uncertainty due to U.S. trade tariffs and weakness in the dollar index is also supporting safe-haven buying for both precious metals. Weakness in the rupee is also supporting prices of gold and silver in the domestic markets.

Today, the US Dollar Index, DXY, was hovering near the 97.85 mark, gaining 0.09 or 0.09%.

“We expect gold and silver prices to remain volatile this week amid volatility in the dollar index, volatility in the rupee and U.S. trade tariff uncertainty and gold is expected to trade in the range of $3,510-3,770 per troy ounce and silver is expected to trade in the range of $39.10-44.00 per troy ounce this week,” he added.

What is driving the rally in gold?

According to Riya Singh, Research Analyst, Commodities and Currency at Emkay Global attributes the surge to the following key factors:

• Soft U.S. Labor Market

August non-farm payrolls showed a mere 22,000 jobs added, well below expectations.

The unemployment rate climbed to ~4.3%, the highest in several years, pointing to cooling labor conditions.

This weakness strengthens the case for monetary easing by the Federal Reserve.

• Federal Reserve Policy Expectations

Markets now almost fully price in a 25 bps rate cut at the September 17 FOMC meeting, with a non-negligible probability of a 50 bps move.

Lower rates reduce the opportunity cost of holding gold, boosting its investment appeal.

• Weaker Dollar and Softer Treasury Yields

Anticipation of easier monetary policy has pressured the U.S. dollar and driven Treasury yields lower.

For non-dollar investors, this makes gold relatively cheaper and more attractive.

• Persistent Central Bank and Safe-Haven Demand

Central banks, notably the PBoC, continue to accumulate gold as part of reserve diversification.

Broader safe-haven demand is supported by ongoing geopolitical tensions and uncertainty over the global growth outlook.

How to trade gold?

Manoj Kumar Jain suggested the following ranges for gold and silver on MCX:

• Gold has support at Rs 1,07,000-1,06,350 and resistance at Rs 1,08,200-1,09,000
• Silver has support at Rs 1,23,500-1,22,200 and resistance at Rs 1,26,000-1,27,700

Jain suggests buying silver on dips around Rs 1,23,500 with a stop loss of Rs 1,22,200 for a target of Rs 1,26,300.

Gold rates in physical markets

Gold Price today in Delhi

Standard gold (22 carat) prices in Delhi stand at Rs 57,792/8 grams while pure gold (24 carat) prices stand at Rs 61,672/8 grams.

Gold Price today in Mumbai

Standard gold (22 carat) prices in Mumbai stand at Rs 57,352/8 grams while pure gold (24 carat) prices stand at Rs 61,200/8 grams.

Gold Price today in Chennai

Standard gold (22 carat) prices in Chennai stand at Rs 56,840/8 grams while pure gold (24 carat) prices stand at Rs 60,600/8 grams.

Gold Price today in Hyderabad

Standard gold (22 carat) prices in Hyderabad stand at Rs 57,184/8 grams while pure gold (24 carat) prices stand at Rs 60,984/8 grams.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)