Gold Prices Fall from Near-Record Highs
On September 7, 2024, gold prices fell from near-record highs due to mixed US job data, which has created uncertainty about a major interest rate cut by the Federal Reserve. Gold had approached a peak of $2,531 per ounce but then dropped below $2,500. COMEX gold ended at $2,526 per ounce, and spot gold was at $2,497 per ounce. On the Multi Commodity Exchange (MCX), the October 2024 futures contract closed at ₹71,460 per 10 grams.
Impact of US Job Data
The recent US job report was mixed and has made investors unsure about the Fed’s plan to cut rates. Non-farm payrolls increased by 142,000 in August, which was less than the expected 160,000. July’s numbers were revised down to 89,000. While average hourly earnings rose by 0.4% and the unemployment rate fell to 4.2%, the overall report suggested a slowdown in hiring. This uncertainty has put pressure on gold prices.
Geopolitical Factors
Ongoing ceasefire talks between Israel and Hamas have also affected gold prices by reducing the demand for safe-haven assets. Despite this, the ₹72,300 per 10 grams level has been a strong resistance point for MCX gold rates. A breakthrough could lead to further price gains.
Expectations for US Fed Rate Cut
The mixed job data has created doubt about the Fed’s upcoming rate cut decision. Traders see a 73% chance of a 25-basis-point cut and a 27% chance of a 50-basis-point cut. Analysts are split, with some expecting the Fed to delay or limit the rate cut, while others, like Anuj Gupta of HDFC Securities, believe at least a 50-bps cut will help support the US job market. Standard Chartered’s Suki Cooper thinks a larger cut could drive gold prices up to $2,700 by the end of the year.
Gold Price Outlook
Looking ahead, the expected easing by the US Fed could support gold prices. Support levels are projected around ₹70,900 per 10 grams ($2,470 per ounce) and ₹70,200 per 10 grams ($2,420 per ounce), which might attract renewed buying interest.
