The price of gold (XAU/USD) is trading almost flat and is settling at around $2,760 at the time of writing on Wednesday after a volatile start to the week. No major moves are expected, with many traders sitting on guard until the Fed’s interest rate decision later in the day. Low interest rates in the United States are often seen as beneficial for trading gold at higher levels.
Market forecasts show that the Fed is likely to keep interest rates unchanged in the range of 4.25%-4.50%, so traders will instead focus on Fed Chairman Jerome Powell’s comments on the central bank’s policy outlook. Traders could feel disappointed. Powell will likely avoid addressing President Donald Trump’s criticism of the Fed or explaining why Trump calls for interest rate cuts. Instead, Powell will likely emphasize that the central bank remains independent, data-driven, and committed to its dual mandate: inflation and the labor market.
The price of gold has set itself at an ideal point to reach a new all-time high if the Fed is somewhat lax on Wednesday. The decline has recovered almost earlier this week, and gold is trading almost flat at the moment. We expect volatility to increase, and traders may push for a new all-time high following comments from Fed Chairman Jerome Powell, who is expected to announce a pause in interest rates.
The first support line sits at $2,721, a double high from November and December that traders broke on January 21. Just below that, $2709 (October 23, 2024, low) is in focus as a second close support. In the event of a breakdown of the above two levels, expect a drop to $2680 with a full sell-off.
Gold prices reach highs due to strong demand
Gold prices rose by 910 rupees to an all-time high of 83,750 rupees per 10g in the national capital on Wednesday due to heavy buying by jewellery dealers and retailers, according to the Sarava Indian Association.
The precious metal with a purity of 99.9 percent settled at Rs 82,840 per 10 grams in the previous trading session. The shiny metal jumped by 4,360 rupees or 5.5 percent to 83,750 rupees per 10 grams from 79,390 rupees per 10 grams on January 1. The gold, which has a purity of 99.5 percent, broke a two-day losing streak, also rising by 910 rupees to a new peak of 83,350 rupees per 10g on Wednesday. The yellow metal ended Tuesday’s trading at Rs 82,440 per 10 grams.
In futures trading on MCX, gold contracts for February delivery rose by Rs 228 to an all-time high of Rs 80,517 per 10g. Futures for April delivery also rose by around 199 rupees, or 0.2 percent, to reach a new peak of 81,098 rupees per 10g.
“Gold prices on the Multi-Commodities Exchange rose to a record high amid a decline in the dollar index and weak consumer data from the United States that lifted the sentiment of precious metals.
Divya Gaglani, commodity research analyst at Axis Securities, said: “Investors sought safe-haven assets after the stock market defeat, especially in US technology stocks.”
Divya Gaglani, commodity research analyst at Axis Securities, said: “Investors sought safe-haven assets after the stock market defeat, especially in US technology stocks.”
Soumel Gandhi, senior commodities analyst at HDFC Securities, said: “Gold rose on Wednesday as traders looked for safety in the precious metal against President Donald’s expected tariff plan.”
Gold prices rise after a significant decline and interest expectations
Global and local gold prices rose, after a significant drop the previous day. The price of an ounce of gold rose by $ 22 in the global bullion market, reaching a new high of $ 2763.
Meanwhile, gold per tola in local markets rose by 2,300 rupees, reaching 288,700 rupees. The price of gold per 10 grams also saw an increase of 1972 rupees, reaching 247513 rupees.
Yesterday, the price of an ounce of gold fell by $26 in the global market and the price of gold tola fell by 2700 rupees in the local markets.
Gold prices steadied on Wednesday as market participants were cautious ahead of the U.S. Federal Reserve’s interest rate decision scheduled for later in the day, while also considering the fallout from President Donald Trump’s trade policies.
Spot gold was little changed at $2,762.89 an ounce as of 0930 GMT. U.S. gold futures rose 0.1% to $2,771.50.
Gold is facing a lot of moving parts now and therefore prices are fluctuating; we have seen a rise in coverage of short positions on the back of the initial threat of tariffs that brought us to levels close to our all-time highs, pushing some profit-taking at the top.
Last week, gold rose 2.6%, approaching an all-time high recorded in October.
Gold has now entered a period of trading in the range as it tries to calculate the total and the impact of the Fed meeting, a possible interest rate cut, and a possible correction in stock markets on the back of Deep Sick news.
As the Fed holds its first monetary policy meeting of the year later in the day, investors focus on any signs about the likely path of interest rates and Fed Chairman Jerome Powell’s speech.