Gold hits record high amid US Fed rate cut expectations: Time to buy or sell the yellow metal?

Gold rates on Monday surged to record highs amidst speculations of a potential US Fed rate cut following remarks by Jerome Powell. Early in the Asian stock market, gold soared past $2,100 (₹175,197), hitting an all-time peak of $2,146 (₹179,319) per ounce.

Similarly, in the domestic market, the gold future contract for February 2024 on MCX spiked to an unprecedented ₹64,000 per 10 grams. However, profit booking led to a retracement from these highs, pulling gold prices below $2,100 (₹175,197).

In tandem, silver prices (March 2024 expiry) on MCX started at ₹78,450 per kg, surging to an intraday high of ₹78,549 within minutes of market opening. Internationally, silver hovered around $25.50 per ounce.

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HDFC Securities on factors driving the Gold surge

Anuj Gupta from HDFC Securities attributed the surge in gold prices to expectations of a US Fed rate cut. Speculation arose after Jerome Powell's speech, suggesting a potential rate cut by March 2024, likely impacting bond yields and further weakening the US dollar.

According to an ICICI Securities report, gold's rise is linked to weakened treasury yields and the US dollar. German yields hit recent lows, and the 10-year US treasury yields dropped amid speculation that the Fed might conclude its tightening cycle. Powell's speech hinted at the impact of tighter monetary policies on slowing the economy, aligning with their forecasts.

Commenting on gold's outlook, Anuj Gupta highlighted strong support at $2,050 per ounce, with resistance at $2,025. On MCX, gold has support at ₹62,800 and faces a hurdle at ₹64,800 per 10 grams. Gupta suggested a buy-on-dips strategy, citing an overall positive trend for the precious metal in the near term.