MCX Gold futures rise over Fed rate cut optimism, crude oil pares losses

MCX Gold August futures contract continued to rise on Friday and were trading nearly 0.3% higher at ₹73,312 per 10 grams at 9:30 am after having hit a high of ₹73,330 on an intraday basis. The rise in the yellow metal comes on the back of a fall in the dollar and treasury yields over anticipation the US Federal Reserve may cut interest rates in September 2024.

On Thursday, the European Central Bank decided to cut rates for the first time since 2019, bringing down its key rate by 25 basis points. The ECB noted that since the Governing Council meeting in September 2023, inflation has fallen by more than 2.5 percentage points and the inflation outlook has improved markedly.

A reduction in interest rates brings down the opportunity cost of holding gold.

Meanwhile, MCX Silver futures climbed to their one-week highs with contracts maturing in July scaling the ₹94,000 per kg mark in early morning trade. The commodity had hit a high of 96,493 in late May.

Meanwhile, MCX Zinc futures maturing in June have managed to pare some of the losses made till last week, rising 0.17% to ₹262.15 per kg. Last week, the contract had touched a low of ₹256.30.

Energy

Oil prices pared some of the losses made during earlier sessions over optimism the US Fed would cut rates in September. A reduction in interest rates acts as a support for oil prices as it spurs economic growth, increasing the demand for the commodity.

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, on Sunday decided to extend most of its oil output cuts well into 2025. The move comes in the wake of the group aiming to boost the market in the backdrop of subdued demand growth, high interest rates and increasing oil production out of the US.

MCX Crude oil June futures contract trades flat at ₹6,329 at 9:38 am. Earlier this week, the contract had hit a low of ₹6,073. Meanwhile, MCX Natural Gas June futures is trading 1.2% higher at ₹236.80.

Investors and traders are now keenly awaiting the unemployment data and the US non-farm payrolls data set to be released on Friday. Following are some of the other economic data that is set to be released in the coming days: