Gold Gains Momentum on Optimism Over US Rate Cuts

Gold prices edged higher on Tuesday, supported by comments from Federal Reserve Chair Jerome Powell that strengthened the case for a September rate cut. Investors are also awaiting further U.S. economic data for additional guidance on monetary policy.

Spot gold increased by 0.1% to $2,423.89 per ounce by 0140 GMT. On Monday, prices reached their highest level since May 20, when gold hit a record peak of $2,449.89. U.S. gold futures remained stable at $2,429.90.  Check MCX Gold Rate Today Live

"Powell continued to set the stage for future policy easing. Markets have fully priced in a rate cut for September, which should keep gold prices well-supported leading up to the decision," said IG market strategist Yeap Jun Rong.

On Monday, Powell noted that the three U.S. inflation readings from the second quarter of this year “add somewhat to confidence” that inflation is moving back toward the Fed’s target sustainably. These remarks suggest that interest rate cuts may be imminent.

Check Gold Rate Today in India

Lower interest rates typically enhance the attractiveness of non-yielding assets like gold.

Investors are now focusing on U.S. retail sales data due at 1230 GMT on Tuesday and comments from Fed governors Christopher Waller and Adriana Kugler later this week for further direction.

A weak retail sales report may support gold prices based on dovish expectations from the Fed. A new high in gold prices could signal a continued upward trend, with the $2,600 level potentially in sight, according to Yeap.

Platinum, Silver, and Palladium Movements

In other metals, spot silver dropped 0.9% to $30.72 per ounce, platinum decreased 0.4% to $991.40, and palladium rose 0.2% to $951.84. Check MCX Silver Price Today

Additionally, India’s four-week platinum imports from mid-June surpassed the total for 2023 as bullion dealers exploited a loophole by registering alloys with around 90% gold as platinum to avoid higher duties, according to government and industry officials. Check Platinum Price in India

On Monday, July 15, gold prices in India saw a decline following a sharp rally over the past ten days. Similarly, U.S. gold rates fell on July 15 as traders awaited comments from the Federal Reserve and economic data for further insights into the U.S. interest rate trajectory.

In India, the price of 22k gold dropped by ₹100, reaching ₹67,500 per 10 grams, while 100 grams of 22 carat gold fell by ₹1,000 to ₹6,75,000 on July 15, 2024. The 24k gold prices decreased by ₹110 to ₹73,640 per 10 grams, and 100 grams of 24k gold became ₹1,100 cheaper, now priced at ₹7,36,400.

As the date for the upcoming budget approaches, Mr. Prithviraj Kothari, Managing Director at RiddiSiddhi Bullions Limited, expressed the bullion industry's high expectations. He highlighted several key hopes regarding the duty structure, including a reduction in the import duty on gold from 15% to 10%, aligning silver import duties with gold under the Comprehensive Economic Partnership Agreement (CEPA), halting import duty benefits from Least Developed Countries (LDC) and Free Trade Agreements (FTA), and providing a special benefit of 0.5% for importing gold through the India International Bullion Exchange (IIBX). 

He also emphasized that while there are numerous expectations from the upcoming budget, the most significant factor for domestic gold prices would be any changes to the import duty on gold. As of January 22, 2024, the import duty on gold in India stands at 15%, which includes a 10% Basic Customs Duty (BCD) and a 5% Agriculture Infrastructure Development Cess (AIDC). 

The expectation is to reduce this duty from 15% to 10%. Should this reduction occur, it would result in a direct 5% decrease in domestic gold prices around the budget period. Conversely, if there is no change in the duty structure, domestic gold prices will remain unaffected, added Kothari.