Gold Prices Today: Yellow Metal Rates Touch Rs 1.09 Lakh Per 10 Gram Amid US Fed Cut Hopes, Weak Dollar

Gold Prices Today: Gold prices have surged to hit fresh all-time highs in the domestic and international futures market amid rising expectations of an interest rate cut by the US Federal Reserve next week, and a weakening dollar.

On the Multi Commodity Exchange (MCX), October gold futures jumped as much as Rs 1,09,500 per 10 grams, up by Rs 982, or 0.90 per cent. Also, the December gold futures on MCX jumped to Rs 1,26,113 per 10 grams, up by Rs 542, or 0.43 per cent.

Globally, COMEX December gold futures gained up to $3,698.9 per ounce, up by $21.5, or 0.58 per cent. The US dollar index, which measures the greenback’s strength against a basket of six major currencies, has slipped nearly 1 per cent to 97.44 over the last week, as of 1:00 PM.

The rally comes after weak US jobs data strengthened bets of a Fed rate cut at the September 16-17 Federal Open Market Committee (FOMC) meeting. The US economy added only 22,000 jobs in August, far below the 75,000 forecast, according to data released by US Bureau of Labor Statistics. The unemployment rate stayed at 4.30 per cent, while wages rose 0.30 per cent from July and 3.70 per cent over the past year.

Physical Gold Demand Drops Ahead of Festive Season

While the investment demand for gold remains high, the demand for gold jewellery has considerably dropped. During the early festive season, from Raksha Bandhan to Onam, demand for gold fell 29 per cent year-on-year (y-o-y) to 50 tonnes, according to the India Bullion & Jewellers Association (IBJA).

IBJA, which publishes daily benchmark gold rates in India, said this was the sharpest decline for the period in three years, as high prices kept many buyers away, while those who did purchase opted for lighter and lower karatage jewellery.

“High prices are denting demand. What is keeping the consumer away is the volatility in price. It is not stabilising,” said Surendra Mehta, national secretary, IBJA.

Gold Price Outlook: What To Watch Next

Gold prices have been rising lately due to high uncertainty in the global trade policies, ongoing unrest in geopolitics in West Asia, between Russia and Ukraine, along with expectations of a Fed rate cut and weakening of the dollar.

The yellow metal's spot prices are up nearly 26 per cent in the past six months and more than 44 per cent over the last year, according to GoldPrice.com.

Looking ahead, gold prices are likely to be guided by a host of macroeconomic data and policy changes happening in the coming week. Aksha Kamboj, vice president, IBJA, said, “There is potential for further upside where there are additional global risk factors influencing markets. Further, the Fed cut day would be an important event to see which side gold moves post rate cut.”

Jateen Trivedi, vice president, research analyst - commodity and currency, LKP Securities, said, the US consumer price index (CPI) - and core CPI-based inflation numbers will also play a key role in guiding trend and volatility.

What Strategies Should First Time Gold Investors Should Follow

The strong rally in gold has attracted many new investors who are now looking for ways to enter the market. Prathamesh Mallya, deputy vice president research – non-agri commodities and currencies at Angel One, said, “For first time investors, it really should not matter, as they have missed the entire rally and cannot go back in time to catch it.”

He advised that whatever dips in prices come in the near future, should be used as points of accumulation in order to derive the benefit of value cost averaging. “Whether one is a new or old investor, they should have exposure to gold as an asset class,” he added.

Mallya suggested investors should not try to time the gold market. Instead, they can add to their holdings in small parts whenever there are corrections. He recommended allocating at least 10-15 per cent of their portfolio to gold, whether through digital gold, exchange traded funds (ETFs), or sovereign gold bonds from the secondary market.