Gold continued its upward momentum for a fourth consecutive session, reaching a more than six-month high and closing at $2045 an ounce.
This surge is attributed to a weakening dollar and the prevailing belief that the US Federal Reserve has concluded its interest rate hikes. There is a growing sentiment among Fed policymakers to maintain interest rates throughout the remainder of the year and to adopt a wait-and-see approach before considering any rate cuts.
Meanwhile, taking cues from global markets, gold futures on MCX reached an all-time high of Rs 62,052 per 10 grams.
The rally in yellow metal was fuelled by the weakening dollar amid speculations of interest rate reductions by the US Federal Reserve. However, amid the prevailing bullish sentiment, traders are advised caution, anticipating a potential $80-$100 price retracement in Comex gold prices following the $250 rally from $1820 to $2070. The correction in the Dollar Index, dipping from 107 to 102.50, suggests possible profit booking in gold as the year-end approaches, said Kedia Commodities, acknowledging the long-term bullish outlook for gold.
US Fed Governor Christopher Waller expressed increased confidence in the current policy stance.
Upcoming economic indicators include the month-over-month German Import Prices, the year-over-year Spanish Flash Consumer Price Index within the Euro Zone, and the quarter-over-quarter Preliminary Gross Domestic Product and Preliminary GDP Price Index from the United States.
Rahul Kalantri, VP of Commodities, Mehta Equities, said with gold reaching a six-month peak and silver hitting a three-month high supported by a shift in the Federal Reserve’s tone towards a less-hawkish stance.
The US dollar index descended to nearly a four-month low, accompanied by US 10-year bond yields slipping to a two-month low, he said.
The ongoing weakness in the dollar index and declining bond yields underpin gold and silver prices. Additionally, the prospect of reduced US inflation in the coming months might create room for Federal Reserve rate cuts in 2024, potentially propelling gold prices to new all-time highs and pushing silver prices to test the $26 per troy ounce mark in the short term, he added.