Gold Price Update
On September 7, 2024, gold prices dropped from near-record highs due to mixed US job data, which has cast doubt on a significant interest rate cut by the Federal Reserve. After approaching a peak of $2,531 per ounce, gold prices fell below $2,500. COMEX gold closed at $2,526 per ounce, while spot gold was at $2,497 per ounce. On the Multi Commodity Exchange (MCX), the October 2024 futures contract ended at ₹71,460 per 10 grams.
Impact of US Job Data
The recent US job data has created uncertainty about the Fed’s rate cut plans. Non-farm payrolls increased by 142,000 in August, falling short of the expected 160,000. July’s figures were revised down to 89,000. While average hourly earnings rose by 0.4% and the unemployment rate dropped to 4.2%, the overall report showed a slowdown in hiring. This uncertainty has exerted downward pressure on gold prices.
Geopolitical Factors
Gold prices have also been influenced by progress in ceasefire negotiations between Israel and Hamas, which has reduced some of the geopolitical risks that usually boost safe-haven demand. Despite this, the ₹72,300 per 10 grams level has proven to be a strong resistance for MCX gold rates. A breakthrough at this level could lead to further gains.
Expectations for US Fed Rate Cut
The mixed job data has led to doubts about the Fed’s next interest rate move. Traders now see a 73% chance of a 25-basis-point cut and a 27% chance of a 50-basis-point cut. Analysts are divided: some anticipate the Fed might delay or limit the rate cut, while others, such as Anuj Gupta from HDFC Securities, expect at least a 50-bps cut to support the job market. Standard Chartered’s Suki Cooper suggests that a steeper cut could push gold prices towards $2,700 by year-end.
Gold Price Outlook
Looking ahead, the anticipated easing of US interest rates could support gold prices. Expected support levels are around ₹70,900 per 10 grams ($2,470 per ounce) and ₹70,200 per 10 grams ($2,420 per ounce), which may attract renewed buying interest.
