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Gold recovers as traders await Fed decision, silver rises 1%

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As of 10:06 a.m. ET (1406 GMT), spot gold climbed 1 per cent to $2,307.88 per ounce, rebounding from its earlier session low, which marked its lowest level since April 5. Meanwhile, U.S. gold futures saw a 0.7 per cent increase, reaching $2,318.50.

Also read: Gold price retraces 3,500 from record high. US Fed meeting outcome in focus

After reaching a nearly six-month high, the dollar softened by 0.2%, resulting in gold becoming more affordable for holders of other currencies. Additionally, benchmark U.S. 10-year bond yields saw a slight decrease.

“We expect the FOMC members are to keep rates unchanged, but their forward guidance will be closely watched as a more hawkish tone could push the U.S. dollar and Treasury Yields further higher and weigh on risk assets as well as gold,” Pranav Mer, VP – Research (Commodity & Currency) BlinkX and JM Financial, told Livemint.

On April 12, gold reached an all-time peak of $2,431.29, driven by robust acquisitions from central banks and interest from Chinese retail investors. Nonetheless, prices have declined by over 5 per cent subsequently, attributed to easing tensions in the Middle East and diminishing anticipations for prompt interest rate reductions in the United States this year.

“The Federal Reserve meeting primarily centers on economic indicators such as GDP, PCE, and job data, rather than solely on interest rates. Consequently, no interest rate hike decision is expected tomorrow, minimizing potential impacts on both the gold and equity markets. Market analysts are attentively monitoring Federal Reserve commentary for insights into the upcoming June meeting,” Rahul Kalantri, VP Commodities at Mehta Equities Ltd, told Livemint.

Also read: Gold slips 1% to touch one-week low ahead of Fed meeting, silver dips 2.6%

What’s weighing on gold prices?

The scheduled announcement of the U.S. central bank’s policy decision is set for 1800 GMT, followed by remarks from Chair Jerome Powell. It is anticipated that the Fed will maintain its benchmark interest rate within the range of 5.25 per cent to 5.5 per cent. 

Recent data revealed that U.S. private payrolls experienced a stronger-than-expected increase in April, indicating continued momentum in the labor market as the second quarter commenced. Traders have recently scaled back expectations of Federal Reserve rate cuts for the remainder of the year, attributing this adjustment to stronger-than-anticipated U.S. economic indicators and persistent inflationary pressures.

Back home, gold prices witnessed a decline of 555 to reach 71,047 per 10 grams in futures trading on Tuesday, attributed to speculators trimming their positions. On the Multi Commodity Exchange (MCX), gold contracts for June delivery experienced a decrease of 555, trading at 71,047 per 10 grams, with a business turnover of 19,243 lots.

Also read: Gold and silver rate today on 01-05-2024: Check latest rates in your city

“Although gold remain in structural bull markets, it is not advisable to take fresh positions for short to medium terms. In the short term we are expecting some more correction in gold price till $2265 in international and 69500 in domestic market. We suggest now anyone who wants to take a fresh position should do only above $2420 in the domestic market; it’s above 73200/-,” Kalantri added.

Silver prices in the spot market increased by 1 per cent, reaching $26.54 per ounce, while platinum experienced a rise of 2.6 per cent to reach $957.70. Palladium remained stable at $947.75.

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Published: 01 May 2024, 09:19 PM IST

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