Gold hit a fresh lifetime high price of Rs 70,275 per 10 grams in the domestic market, according to MCX. On April 05, the glittering metal opened at a price of Rs 69,868 per 10 grams. However, Gold came off high and was getting quoted at Rs 69,801 per gram. The metal touched an intraday low of Rs 69,800. The futures contract for the June expiry of the yellow metal rose to an all-time high of Rs 69,908. Market participants said that US Fed chair Jerome Powell’s comments on rate cuts are taking the gold rally towards new highs.
On April 04, US Fed Powell hinted at the possibility of rate cuts, helping gold bulls to sustain this rally, said Bhavik Patel, commodity and currency analyst at Tradebull Securities.
In the last six trading sessions, gold has managed to overcome all headwinds and continued to post fresh all-time highs both in MCX and COMEX. On April 04, gold closed above $2300 in COMEX for the first time. Even yesterday’s higher-than-expected US ADP Non-farm payroll data or weak ISM service PMI failed to stop gold’s rally, Patel said.
Gold’s gains also occurred despite CME’s FedWatch tool lowering the probability of a rate cut in June from 60% to 58% at the start of this week due to stronger US manufacturing data.
Momentum hedge funds have been actively taking long positions in gold futures disregarding the overbought nature of Gold. The recent rise in oil prices due to Ukraine’s attack on Russia’s refineries has also added further demand for gold, as higher energy costs translate to heightened inflationary pressures down the road, making the precious metal an attractive hedge against inflation.
The next catalyst for any much-needed correction in gold could come on Friday when the US will release its Non-Farm payroll data.
Commenting on the gold prices Praveen Singh, Associate Vice President of Fundamental Currencies and Commodities at Sharekhan by BNP Paribas said that the Fed Chair Powell, in his speech at Stanford University, reiterated his wait-and-see stance as he reaffirmed that it will likely be appropriate to begin lowering rates at some point this year. He said that recent inflation figures – though higher than expected- did not materially change the overall picture. Markets once again interpreted him as dovish.
Also, throughout the financial year 2023-24, the gold market in India maintained its robust performance, buoyed by escalating geopolitical tensions worldwide. Volatility persisted in gold prices, primarily driven by sluggish growth in advanced economies and the tightening of monetary policies by global central banks amidst elevated inflation levels.
During FY24, gold prices on the MCX surged by over 12%, soaring from approximately Rs 59,400 per 10 grams at the commencement of the year to around Rs 67,000 per 10 grams at year-end.