Gold prices today show signs of retreating from the all-time highs reached yesterday, as trading dynamics shift in response to economic indicators and global market sentiment. As of September 26, the Multi Commodity Exchange (MCX) reports gold trading at ₹75,249 per 10 grams, while silver futures for December are down ₹93, now priced at ₹92,138 per kg.
International Gold Market Dynamics
In the international market, gold prices continue to exhibit minor gains after recently hitting record levels. On the global stage, gold remained steady above $2,650 for the second consecutive session, primarily due to traders increasing the likelihood of a significant interest rate cut by the Federal Reserve (Fed) at its upcoming meeting in November. However, rising US Treasury yields prevented gold from climbing further, keeping it near $2,660 per ounce overnight.
Market sentiment turned slightly negative during the US trading session, contributing to fluctuations in bullion prices. Gold briefly reached a peak of $2,670 but subsequently retreated as US Treasury yields rose by 4.5 basis points to 3.775%. Concurrently, the US Dollar Index rebounded from a 14-month low, gaining 0.54% to settle at 100.88.
US Economic Indicators Affecting Gold Prices
Recent economic data from the United States indicates a cooling in business activity within the manufacturing sector, while the services sector remains robust. Notably, a decline in Consumer Confidence, as reported by the Conference Board (CB), suggests potential challenges in the labor market that may not have been fully anticipated.
Last week, the Federal Reserve lowered borrowing costs by 50 basis points, bringing the range to 4.75% – 5.00%. Traders are now increasingly optimistic about the possibility of additional cuts of the same magnitude. According to the CME FedWatch Tool, the likelihood of a further 50 basis point cut is estimated at 60%, while a 25 basis point reduction stands at 40%.
Analyst Insights
Neha Qureshi, Senior Technical and Derivative Analyst at Anand Rathi Commodities & Currencies, notes that bullion prices have surged by 29% so far in 2024, driven by demand for gold exchange-traded funds (ETFs) and the easing policies of major central banks. Qureshi emphasizes that geopolitical tensions could propel traders’ focus towards the $2,700 mark in the medium term.
In the short term, market participants are particularly attentive to Fed Chair Jerome Powell’s upcoming speech, scheduled for Thursday, as it may provide further insights into future interest rate movements. Additionally, the Core Personal Consumption Expenditures (PCE) Index data set to be released tomorrow could play a crucial role in determining whether gold prices will maintain their elevated levels towards the end of the week.
Silver Market Performance
While gold shows fluctuations, silver prices have also experienced minor losses today. December futures for silver are currently trading at ₹92,138 per kg, down ₹93. The overall sentiment surrounding silver mirrors that of gold, as both precious metals are influenced by broader economic conditions and market expectations.
As traders navigate through varying economic indicators and market sentiments, the outlook for both gold and silver remains cautious yet optimistic. Investors are likely to continue monitoring key data releases and statements from financial authorities that may impact pricing trends in the coming days.
Conclusion
In summary, the recent retreat in gold prices from record highs is a reflection of a complex interplay of factors, including interest rate expectations and economic indicators from the United States. With significant geopolitical concerns and changing market dynamics, the focus remains on the Federal Reserve’s policy direction and upcoming economic data that could influence precious metal prices. As traders remain vigilant, both gold and silver are expected to maintain their positions as critical assets in uncertain times.
Related topics: