Gold price today: The yellow metal falls as the US dollar price recovers from its one-year low. US Federal Reserve interest rate cut in focus

Gold price today: After the US dollar recovered from its one-year low, there was some profit-taking in the gold price this Tuesday morning. On the Multi Commodity Exchange (MCX), today’s gold price opened at ₹71,898 per 10 grams and reached an intraday low of ₹71,770 within minutes of the opening bell. In the international market, the spot price of gold is hovering around $2,506 per ounce, recording an intraday loss of about 0.45 percent. In contrast, the COMEX gold price is trading at around $2,541 per troy ounce, losing nearly 0.53 percent during the early morning session on Tuesday.

According to commodity market experts, gold prices are under pressure today as US dollar rates are recovering after hitting a one-year low. They said that the rally in US dollar price is just a relief rally as the rumours of a rate cut by the US Federal Reserve are expected to act as a weakener for the US dollar. They advised gold investors to continue buying on dips and predicted that MCX gold price ₹72,800 and ₹73,500 per 10g.

Recovery of US dollar exchange rates

Speaking about the reasons that are dragging gold prices down today, Anuj Gupta, Head of Commodities and Currencies at HDFC Securities said, “Gold prices are under pressure today due to the relief rally in US dollar prices. The US dollar index has broken its crucial support of 101.50 and is now trading below 101, indicating a selling sentiment on rising USD in the forex market. Therefore, this fall in gold prices today should be viewed as a low price fishing opportunity.”

Jateen Trivedi, VP Research Analyst, Commodities and Currencies at LKP Securities, said, “The exact magnitude, pace and frequency of these rate cuts will depend on future economic data, particularly inflation, employment numbers and other key economic indicators. As a result, global markets are actively pricing in these potential cuts and gold, being a non-yielding asset, is likely to benefit from the lower interest rate environment. 71,500 will act as a good support to enter gold buying on any dip while 72,500 will continue to act as resistance.”

Anuj Gupta of HDFC Securities said that the trend in MCX gold price today is positive and the price of the yellow metal ₹72,800 and ₹73,500 for possible recovery.

Focus on US Federal Reserve interest rate cut

IG market strategist Yeap Jun Rong said a US Federal Reserve rate cut in September was set in stone, but the debate over its size could lead to a wait-and-see attitude as investors based their views on upcoming economic data.

According to the CME FedWatch tool, traders have a 70 percent chance of a 25 basis point (bp) rate cut and about a 30 percent chance of a more significant cut of 50 bp.

A low interest rate environment tends to increase the attractiveness of interest-free gold bars.

Mary Daly, president of the U.S. Federal Reserve Bank of San Francisco, said a quarter-percentage point cut in borrowing costs was likely next month.

“We expect the uptrend in gold prices to continue, given its positive performance in past Fed rate-cutting cycles, healthy central bank demand and its status as a good hedge against geopolitical and economic risks,” Yeap said.

Tensions in the Middle East remain

Residents of Lebanese towns felt little relief Monday that one of the fiercest exchanges of fire between the armed group Hezbollah and the Israeli military the previous day was over, worn down by the ongoing tension of the 10-month conflict.

(With contributions from Reuters)

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