NEW DELHI, Sep 18 : Gold prices continued to shine bright by rallying Rs 170 to Rs 73,264 per 10 grams on the MCX on Wednesday amid a bullish trend in the international markets ahead of the US Federal Reserve interest rate decision.
In the futures trade on the Multi Commodity Exchange (MCX), gold contracts for October delivery was trading higher by Rs 170, or 0.23 per cent, at Rs 73,264 per 10 grams.
It had closed at Rs 73,094 per 10 grams on the exchange in the previous close on Tuesday.
However, silver contracts for December delivery declined Rs 116, or 0.13 per cent, to Rs 89,024 per kilogram on Wednesday. In the previous session, the silver metal had finished at Rs 89,140 per kg on Tuesday.
According to HDFC Securities, spot gold prices (24 carats) in the Delhi markets are trading at Rs 74,850 per 10 grams, down Rs 50 from the previous day.
Meanwhile, silver prices plunged Rs 800 to Rs 91,300 per kg from the previous close of Rs 92,100 per kilogram.
Globally, Comex gold is trading 0.42 per cent higher at USD 2,603.20 per ounce.
“Gold prices in the international market are hovering near their lifetime highs due to demand optimism amid surging geopolitical tensions, feeble global growth outlook and hopes of a rate cut by the US Federal Reserve,” Hareesh V, Head of Commodities at Geojit Financial Services, said.
According to Saumil Gandhi, Senior Analyst of Commodities, HDFC Securities, Better US retail sales data showed that US consumers are holding up, which pushed US Treasury yields higher and capped the gains of the precious metal.
Additionally, silver prices were quoted marginally lower at USD 30.97 per ounce in the international markets.
“The Fed will deliver its interest rate decision at the conclusion of its meeting later on Wednesday, with US Fed Reserve Chair Jerome Powell holding a press conference afterward,” Navneet Damani, Group Senior VP – Commodity Research at Motilal Oswal Financial Services, said.
On the data front, focus will be on housing numbers form US and Consumer Price Index (CPI) data from UK and EU to be release later on Wednesday, Damani said.
The last Fed rate cut was in March 2020 during the Covid-19 pandemic. In the previous week, US CPI and Producer Price Index data were reported slightly mixed with yearly data on lower side, while core data was seen a bit higher.
However, Fed Chair Powell and other Fed officials have raised concerns regarding the labour market keeping the talks rate cut on the table, he added.
According to analysts, when there is a decline in interest rates, the opportunity cost of holding non-interest yielding assets like gold decreases. A super-sized rate cut may further weaken the US currency, which is already trading near its weakest level this year.
In addition, since gold is traditionally viewed as a hedge against inflation, investors’ anticipation of rising inflation due to lower rates tends to further lift the investment demand, along with its prices, making it more attractive to investors, they said. (PTI)
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