Gold Price Today: Yellow Metal Rises on Rising Demand, Fed Rate Cut Hopes. Should You Buy Gold After Recent Price Drop?

Gold rates on MCX rose on Monday, tracking gains in international bullion prices, driven by safe-haven demand. MCX gold prices have fallen more than 4% in July so far and analysts believe the recent price decline could be a good opportunity to buy gold.

MCX gold rate increased by ₹249, or 0.37%, a ₹68,435 per 10 grams, while the price of MCX silver increased by ₹684, or 0.84%, a ₹82,055 per kg. In the international commodity market, spot gold rose 0.4% to $2,394.88 per ounce, while U.S. gold futures rose 0.5% to $2,393.20.

Gold prices in India fell last week due to the government's tariff cuts announced in the Union Budget 2024 and concerns over demand in China. Better-than-expected US second-quarter GDP and jobless claims data also put downward pressure on gold rates.

MCX gold rate was around ₹71,600 per 10 grams in early July and reached a maximum of around ₹74,730 at mid-month. However, gold prices fell sharply after the Budget 2024 and hit a multi-month low of nearly ₹67,400 last week.

However, gold prices are expected to rise from here onwards, supported by short-covering and some positive factors domestically and globally.

“Growing hopes of interest rate cuts by the US Federal Reserve, weakness in the US dollar index, escalating global geopolitical tensions and rising physical demand in domestic markets post tariff adjustments are key factors supporting the yellow metal prices,” said Ajay Kedia, Director, Kedia Advisory.

Speaking about the silver price, Kedia said that there is pessimism in the silver market due to weak data from China. The gold-silver ratio has also risen sharply and is hovering around the 85 level, which shows that gold is expected to outperform silver.

“Volatility in gold prices is likely to remain high. The yellow metal could find support at ₹67,000 and resistance is seen at ₹Level 69,800. Support for silver is placed at ₹80,200 and may meet resistance at ₹Level 85,600,” Kedia said.

Jigar Trivedi, senior research analyst for currencies and commodities at Reliance Securities, noted that MCX gold fell over 4% in July, while, in contrast, Comex gold rose around 2.9%.

The week is important for gold prices as some of the world's central banks, including the US Federal Reserve, will announce their monetary policies.

"The Fed is likely to keep rates steady as the market is largely pricing in a rate cut in September. The BoJ is expected to hike the rate and the Bank of England may cut it under the new government. The dollar index is struggling around the 104.30 level. In addition, the US will also release July non-farm payrolls data. So, from an economic data perspective, the week is crucial," Trivedi said.

That said, the U.S. has a major political event in November: the presidential election. Finally, as prices in India have fallen sharply due to basic import tax cuts, holiday demand could emerge and provide support, Trivedi added.

Remains bullish on gold prices for the week and expects August MCX futures to rise to ₹69,200 per 10 grams per week.

Technical view

Gold is trending positively in the hourly timeframe, with prices consistently trading above the 50-period moving average. This upward move indicates strong bullish momentum, suggesting that buyers are in control, according to Kedia.

He suggests traders look for potential buying opportunities as the price action continues to reflect strength and the possibility of further gains. Keep an eye on any pullbacks towards the 50 MA for possible entries, he said.

Disclaimer: The views and recommendations above are those of individual analysts or brokerage firms and not of Mint. We advise investors to consult certified experts before making any investment decisions.