Gold price close to $2,500/ounce mark as Fed rate-cut optimism grows; check local rates

Gold, a safe-haven asset which has risen meteorically in the post-COVID-19 period, is close to the $2,500 per ounce mark following a fresh spurt in its value seen this week. The rates were driven upwards by the growing optimism over a likely reduction in the benchmark lending rates by the US Federal Reserve.

The metal, on Wednesday, jumped to its all-time high of $2,482.29 an ounce. After hitting the peak, it had pared some of the gains to close at $2,458.66.

In the early trade on Thursday, gold rose by another half-a-percentage point. The metal was trading at $2,472.14 an ounce at 0720 hours GMT, which was up 0.55% as against the last closing price.

US gold futures also climbed, with the contracts for August delivery trading 0.7% higher at $2,477 an ounce on the Commodities Exchange Center (COMEX).

On India's Multi Commodities Exchange (MCX), gold futures for August delivery gained 0.52% to trade at Rs 74,520 per 10 gram at 12:55 pm.

'$2,500 next immediate target'

According to Tim Waterer, KCM Trade's chief market analyst, gold peaked to a new high watermark as investors are bracing for the onset of a lower interest rate environment.

"The $2,500 range is the next immediate target, though if the current momentum can be sustained, we could be looking at prices further north from here before year-end," news agency Reuters quoted Waterer as saying.

The prospects of a lower interest rate received a boost on Wednesday, when Fed officials, who have convened for a meeting, said that the monetary body was "close" to reducing the benchmark lending rates in view of the inflation's downward trajectory.

A lower interest rate leads to more liquidity in the economy, which in turn raises the demand for gold, which acts as a hedge against inflation.

Earlier this week, Jerome Powell, the Fed chairman, expressed concern over keeping rates elevated over a longer period of time.

“The implication of that is that if you wait until inflation gets all the way down to 2%, you’ve probably waited too long, because the tightening that you’re doing, or the level of tightness that you have, is still having effects which will probably drive inflation below 2%,” he said on Monday, while speaking at the Economic Club of Washington D.C.

Gold rates in Indian cities

• As per the local rates tracked by Upstox, the per 10 gram of 24 karat gold in Mumbai was trading 0.1% lower at ₹75,026.

• In New Delhi, the retail prices decreased by 0.39% to ₹74,512.

• In Kolkata, the rate was up 0.1% at ₹75,539.

• In Chennai, the price declined by 0.59% to ₹74,659

According to analysts, the global demand for gold is expected to remain strong in the medium-to-long term. The price could peak to $3,000 an ounce in the international market, as per a forecast released by Citi Research in April.