Gold prices in India witnessed a significant upswing on the Multi Commodity Exchange (MCX) on Thursday, riding a wave of optimism fueled by expectations of interest rate cuts from the US Federal Reserve and healthy physical demand for the precious metal. The rally mirrored gains in international spot markets, setting a positive tone for bullion traders and investors.
Market Movement and Key Price Levels
The most active April gold futures contract on MCX was trading higher by 0.55%, or Rs 337, at Rs 61,850 per 10 grams. This upward momentum followed a positive trend in the global markets. On the international front, spot gold was quoted at $2,024.89 per ounce, marking an increase of $5.47 or 0.27%.
Market analysts pointed to specific technical levels that traders should monitor closely. Neha Qureshi, Senior Technical & Derivative Analyst at Anand Rathi Commodities & Currencies, identified crucial thresholds. She noted that support for the MCX April gold contract is positioned at Rs 61,500, followed by Rs 61,200. On the upside, resistance is expected near the Rs 62,000 level.
Drivers Behind the Gold Price Rally
The primary catalyst for the surge in gold prices is the growing market sentiment that the US Federal Reserve may begin cutting interest rates later in 2024. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making them more attractive to investors. This anticipation has weakened the US dollar and bolstered bullion's appeal.
Simultaneously, healthy physical demand for gold in the spot market is providing a solid foundation for the price increase. This demand, particularly from key markets like India, adds fundamental strength to the ongoing price rally, complementing the speculative financial flows.
Expert Outlook and Trader Guidance
Experts are advising traders to adopt specific strategies based on the current technical setup. Neha Qureshi from Anand Rathi suggested that traders could consider buying gold on dips around the Rs 61,500 support level, setting a stop loss at Rs 61,200, and targeting a price of Rs 62,000.
The broader market view remains cautiously optimistic, contingent on macroeconomic data and central bank communications. Investors are closely watching for any new signals from the Fed regarding the timing and pace of potential monetary policy easing, which will be a major determinant of gold's trajectory in the coming weeks.
In summary, the confluence of dovish central bank expectations and tangible physical demand has created a favorable environment for gold. While the immediate technical path suggests a test of higher resistance levels, market participants are advised to stay alert to global economic indicators that could influence the Fed's policy decisions and, consequently, the lustre of the yellow metal.
