Gold prices dipped on Tuesday as investors awaited crucial US inflation data and the Federal Reserve’s policy meeting outcome, both expected to provide insights into the central bank’s interest rate strategy amidst ongoing inflation concerns.
As of 0317 GMT, spot gold fell by 0.3% to $2,302.89 per ounce, while US gold futures also declined by 0.3%, settling at $2,320.20.
In India, the Multi Commodity Exchange (MCX) gold futures for August 2024 expiry opened lower at ₹71,251 per 10 grams.
Matt Simpson, a senior analyst at City Index, highlighted the potential influence of recent robust payroll data on the Federal Reserve’s upcoming decisions.
“The Fed’s hands are tied following the strong payrolls report, as it likely doesn’t enable them to signal the September cut that traders desperately want to hear. This could see gold take another dent or two amid rising yields and a stronger US dollar,” Simpson explained in a Reuters report.
Investors are keenly focused on the May consumer price index (CPI) inflation report, due on Wednesday, just hours before the Federal Reserve concludes its two-day meeting.
“We might see a last-minute panic and elevated levels of volatility should inflation come in hot,” Simpson added.
Updated economic projections from Fed officials are anticipated to reveal fewer interest rate cuts than expected three months ago, reflecting persistent inflationary pressures.
Saish Sandeep Sawant Dessai, an analyst at Angel One, underscored the uncertainty surrounding gold’s outlook, dependent on the forthcoming US inflation data and the Federal Reserve’s policy decision.
Meanwhile, Rahul Kalantri, Vice President of Commodities at Mehta Equities, noted the volatile trading sessions leading up to the FOMC meetings.
Anuj Gupta of HDFC Securities advised a sell-on-rise strategy until the Fed’s meeting outcome is announced. He projected that international gold prices would fluctuate between $2,280 and $2,330 per ounce, with MCX gold rates ranging from ₹70,500 to ₹71,800 per 10 grams.
As investors await the Fed’s decision and the CPI report, the question remains: should you buy the dip?
The current market volatility suggests a cautious approach, with potential buying opportunities emerging if prices stabilize post-Fed meeting.
The outcome of the inflation data and the Fed’s policy stance will be crucial in determining the near-term direction for gold prices.
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