Gold futures hit a new high on Thursday after the U.S. Federal Reserve kept its key interest rate steady for the fifth straight time and continued to signal three rate cuts this year.
The yellow metal moved higher on the back of rate-cut hopes, according to analysts.
The price of the MCX gold futures reached a new all-time high of Rs 66,943, marking an increase of nearly 2% compared to the previous closing price.
"Internationally, gold surged above $2,200 an ounce for the first time following the Federal Reserve's decision to maintain its projection for three rate cuts this year," Rahul Kalantri, vice president - commodities at Mehta Equities Ltd., said. "The dollar index witnessed a significant decline following the Fed meeting, which bolstered sentiments in the bullion markets."
Gold's support levels stand at $2,184–2,168, with resistance at $2,217–2,235. Meanwhile, silver finds support at $25.55–25.40 and resistance at $25.95–26.12, Kalantri said. In terms of the Indian rupee, gold finds support at Rs 66,380–66,040, with resistance at Rs 66,880 and Rs 67,120.
Gold can still draw support from interest rates falling. Speculation around rate cuts has pushed bond yields lower, which has boosted the yellow metal that pays no yield to hold, according to Peter McGuire, chief executive officer of XM Australia.
But yields are still quite high from a historical perspective, trading near their highest levels in a decade. This suggests that gold can still capitalise on yields falling back to more 'normal' levels, particularly if the U.S. economy weakens, forcing the Fed to slash interest rates deeper and faster, McGuire said in a note.
Morgan Stanley expects gold prices to go up to $2,300 per ounce in 2024, but price action is likely to be choppy as uncertainties remain over U.S. data and rate cuts by the Fed.
The yellow metal also tends to rise after the first Fed rate cut, while elevated geopolitical and political risk in 2024 should also provide support. The World Gold Council observed that elevated geopolitical risk tends to weigh on recycling volumes, according to the research firm.
The Comex Gold positioning has jumped back to 190,000 lots long, but it is well below peaks of 300,000 lots long, it said in a March 15 note.
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