Gold price recovers in global market, heads towards $2,400 level; check rates in Indian cities

After nosediving last week, gold price seems poised for recovery in the global market, with the rates inching close to $2,400 level. The uptick in the metal's value is fueled by the growing optimism over the US Federal Reserve initiating its rate cut cycle in the near future.

In early trade on Monday, July 29, spot gold edged in the green. The metal was trading at $2,395 an ounce at around 0500 hours GMT, up 0.36% as against the last closing price.

The US gold futures also climbed, with the August contracts trading 0.51% higher at $2,393 per ounce on the Commodity Exchange Center (COMEX).

On India's Multi Commodity Exchange (MCX), gold futures for August delivery were trading 0.37% higher at ₹68,435 per 10 grams at 11:22 am (IST).

The increase in gold's value comes ahead of the Fed meeting on July 30-31. While the rates are likely to be held steady, the monetary body is expected to indicate the initiation of the rate cut cycle in September, analysts said.

The expectations of interest rate cut in September a received boost on Friday, when data showed the US' consumer inflation slowing to 2.6% year-on-year in June. Core inflation for the three-month period ending June slowed to 2.3%.

The data may nudge the US Federal Reserve, which has set a target of achieving 2% inflation, to consider reducing the benchmark lending rates in the upcoming months.

A lower interest rate augurs well for the gold market, as more liquidity into the economy increases the demand for the yellow metal which is seen as a hedge against inflation.

Gold's volatile July

The month of July was volatile for gold, as the metal traded mixed in the first week, but gained momentum thereafter and peaked to an all-time record of $2,482.29 an ounce on July 17.

However, the gold rate faced a steep decline in the month's third week after US President Joe Biden marked an end to his re-election bid. His exit from the White House race was followed by a jump in the dollar's value, which in turn led to a plunge in the value of gold.

At one point, gold ended up shedding over $130 an ounce from the record high clocked earlier this month.

Check gold rates in Indian cities

In New Delhi, the rate climbed by 0.59% to ₹70,379. Kolkata also witnessed an increase of 0.2%, as the metal was trading at ₹69,630 per 10 gram in the city.

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