Gold prices edged lower on Wednesday (March 6) but held above the $2,100 an ounce level, after rising bets for a June US interest rate cut propelled bullion to a record peak in the previous session, ahead of Federal Reserve Chair Jerome Powell's testimony, according to a Reuters report.
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Spot gold edged down 0.2% at $2,124.46 per ounce. US gold futures fell 0.4% to $2,132.90.
On the domestic front, gold was trading at ₹64,750 per 10 grams.
This decline follows the recent achievement of a record peak of $2,141.79 per ounce for gold in the global market. The surge was driven by a confluence of factors, including expectations of US rate cuts, geopolitical tensions, and concerns about a potential pullback in equity markets.
The upward trend in the domestic market mirrors the global pattern.
Rahul Kalantri, VP of Commodities at Mehta Equities, attributes the record-high gold prices to the release of supportive US economic data on Tuesday.
Additionally, profit-taking in US equity markets and stability in the dollar index and US 10-year bond yields played a role.
Market participants, however, are cautious as gold reaches these unprecedented levels.
The upcoming speech by the Fed Chairman regarding inflation and potential interest rate adjustments is expected to be a crucial factor influencing the direction of precious metal markets.
Looking ahead to Wednesday's session, gold prices are anticipated to continue experiencing volatility.
"Gold is expected to find support in the $2,098-2,082 per ounce range, with resistance between $2,124 per ounce and $2,140 per ounce. In terms of Indian rupees, gold has support at ₹64,580-64,350 per 10 grams and resistance at ₹64,980-65,240 per 10 grams," Kalantri said.
Colin Shah, MD of Kama Jewelry, reflects on the performance of gold during February 2024, emphasising the sustained momentum witnessed during the month.
The surge in the last week of February, influenced by global factors such as US Fed rates, has set the stage for further escalation.
With gold prices hovering around ₹62,000 per 10 grams, Shah predicts a gradual progression, possibly crossing the ₹70,000 per 10 grams mark by year-end.
The anticipation of US rate cuts, aiming for a 4% bracket by year-end, fuels Shah's optimism.
He foresees gold prices remaining bullish throughout the year, driven by global economic events, consumption demands, and a strong domestic market where gold is considered a reliable investment asset class.
As per Manav Modi, Analyst, Commodity and Currency at MOFSL, US labour market data scheduled this week could further increase gains for bullions.
As investors navigate these uncertain times, the performance of gold, coupled with expert opinions, suggests that the precious metal remains a valuable hedge against economic uncertainties and market fluctuations.
Gold acts as a hedge or protection against equity market volatility. Experts generally suggest individuals have 5-10% of their portfolio in gold.
However, it is essential for investors to carefully consider their risk tolerance and market dynamics before making investment decisions in this volatile environment.
(Edited by : Amrita)
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