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    Home / News / Business News / Gold shines at a new high of Rs. 66,778
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    Gold shines at a new high of Rs. 66,778
    US Fed's decision to keep interest rates unchanged has triggered a surge in gold prices

    Gold shines at a new high of Rs. 66,778

    By Pratyaksh Srivastava
    Mar 21, 2024
    11:50 am

    What's the story

    Today, the MCX gold rate soared to a new high of Rs. 66,778 per 10 grams, shortly after the commodity market opened.

    Internationally, spot gold prices are holding steady above $2,200 per ounce.

    The increase in gold prices today is largely due to the outcome of Wednesday's US Federal Reserve meeting and its announcement of three rate cuts in 2024.

    Driving factor

    How US Fed's decision impacts gold prices

    The US Federal Reserve's decision to keep interest rates unchanged at 5.25%-5.50% has triggered a surge in spot gold prices.

    Market analysts emphasized that investors breathed a sigh of relief when the Federal Reserve confirmed its plan for three rate cuts in 2024.

    The lenient stance of the Federal Open Market Committee and chair Jerome Powell's assertion that strong hiring alone wouldn't prevent rate cuts have contributed to this spike in gold prices.

    Oil angle

    Crude oil prices also influence gold rates

    Anuj Gupta from HDFC Securities pointed out that crude oil prices could significantly impact gold price trends following the US Fed meeting.

    He elaborated that escalating crude oil prices are likely to exert inflationary pressure on precious metal prices and other assets.

    The uncertainty surrounding inflation is directly tied to crude oil prices and could bolster gold rates.

    Dollar effect

    Strengthening dollar puts downward pressure on gold prices

    Before the US Fed meeting took place, a strengthening US dollar put downward pressure on gold prices, resulting in sharp selling during morning trading sessions.

    The gold futures contract on the MCX for April 2024 opened at a lower Rs. 65,348 per 10 grams. However, some strategic buying at these lower levels helped offset early morning losses.

    Anuj Gupta from HDFC Securities attributed this pressure to the US dollar index surpassing the 103 mark.

    Stable rates

    Fed's rate cut indications and market impact

    The US Federal Reserve has kept benchmark interest rates steady at 5.25%- 5.50%, marking the fifth consecutive instance of no change.

    Despite a robust job market and rising prices, the Fed hinted at potential rate cuts three times this year.

    G. Chokkalingam, Founder and Head of Research at Equinomics Research Private Limited, predicts that gold prices will remain strong due to geopolitical uncertainty and rate cuts, while Shrey Jain of SAS Online believes that lower interest rates favor gold prices.

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