Both gold and silver prices recorded a dip on the Multi Commodity Exchange (MCX) on Tuesday, September 3, 2024. Gold futures, maturing on October 4, 2024, stood at ₹71,512 per 10 grams, after a drop of ₹89 or 0.12%.
Similarly, silver futures, maturing on December 5, 2024, fell by ₹264 or 0.31%, trading at ₹84,290 per kg.
This decline reflects broader trends in global markets as investors await key economic data from the US
Factors behind the decline
Stronger dollar: The dollar remains near a two-week high, making gold less appealing to holders of other currencies.
This factor has weighed heavily on gold prices globally.
US economic data: Investors are anticipating several critical US economic reports, including the August non-farm payrolls, ISM surveys, and the JOLTS job openings data.
These reports will provide insights into the Federal Reserve’s next move on interest rates.
Interest rate expectations: Traders currently see a 31% chance of a 50-basis-point rate cut at the Fed’s September policy meeting.
Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, but recent data, including strong US consumer spending in July, have tempered expectations for aggressive rate cuts.
Market sentiment remains cautious as investors wait for clear signals from the Federal Reserve.
What lies ahead
Despite the recent dip, gold prices are likely to remain resilient, with potential for gains, experts say.
If US economic data signals a weaker economy and the Fed embarks on a long-term rate cut cycle, gold could rally.
Some analysts predict prices could reach as high as $2,640 per ounce by the end of the year.
As long as gold holds above the $2,480 per ounce support level on a swing basis, the outlook remains positive.
What should investors do?
Investors should closely monitor upcoming US economic data and the Federal Reserve’s decisions.
These factors will influence gold and silver prices in the near term.
While short-term fluctuations are inevitable, the long-term outlook for gold remains strong. Investors looking for a hedge against economic uncertainty may consider maintaining or increasing their exposure to gold.
Given the current market conditions, diversifying investments across different asset classes, including gold, equities, and debt funds, could help mitigate risks, experts say.
Similarly, silver futures, maturing on December 5, 2024, fell by ₹264 or 0.31%, trading at ₹84,290 per kg.
This decline reflects broader trends in global markets as investors await key economic data from the US
Factors behind the decline
Stronger dollar: The dollar remains near a two-week high, making gold less appealing to holders of other currencies.
This factor has weighed heavily on gold prices globally.
US economic data: Investors are anticipating several critical US economic reports, including the August non-farm payrolls, ISM surveys, and the JOLTS job openings data.
These reports will provide insights into the Federal Reserve’s next move on interest rates.
Interest rate expectations: Traders currently see a 31% chance of a 50-basis-point rate cut at the Fed’s September policy meeting.
Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, but recent data, including strong US consumer spending in July, have tempered expectations for aggressive rate cuts.
Lack of fresh catalysts: Gold has struggled to maintain levels around its all-time highs due to the absence of new, positive drivers.
Market sentiment remains cautious as investors wait for clear signals from the Federal Reserve.
What lies ahead
Despite the recent dip, gold prices are likely to remain resilient, with potential for gains, experts say.
If US economic data signals a weaker economy and the Fed embarks on a long-term rate cut cycle, gold could rally.
Some analysts predict prices could reach as high as $2,640 per ounce by the end of the year.
As long as gold holds above the $2,480 per ounce support level on a swing basis, the outlook remains positive.
What should investors do?
Investors should closely monitor upcoming US economic data and the Federal Reserve’s decisions.
These factors will influence gold and silver prices in the near term.
While short-term fluctuations are inevitable, the long-term outlook for gold remains strong. Investors looking for a hedge against economic uncertainty may consider maintaining or increasing their exposure to gold.
Given the current market conditions, diversifying investments across different asset classes, including gold, equities, and debt funds, could help mitigate risks, experts say.
First Published: Sept 3, 2024 10:23 AM IS