Gold takes a breather on profit booking, falls by Rs 1,300/10g
MUMBAI: Gold prices have retreated from the peak it scaled on Tuesday falling Rs 1,300 to Rs 1,13,800/10 grams in the Capital on Wednesday, as investors have rushed into book profit from the recent rally hitting many new highs, ahead of the US Federal Reserve's policy decision late Wednesday wherein it’s widely expected a 25 bps reduction in the Federal funds rate.
Gold has rallied 42 percent so far this year and many analysts are expecting the safe haven metal to cross $3800/ounce sooner than later. This rally came on the back of a 26 percent rally in 2024 and another 22 percent in the previous year. Both in the domestic as well as in the international markets gold had scaled to record high on Tuesday as the Fed meeting began and the dollar index fell to a three-year low.
While on the Chicago exchange gold futures rallied to $3,734/ounce, and spot prices crossed $3,703.23/ounce on Tuesday, on the MCX it had crossed a new high of Rs 1,10,548/10 grams with the December delivery hitting Rs 1,11,599/10 grams.
According to the All-India Sarafa Association, gold of 99.9% purity declined by Rs 1,300 to Rs 1,13,300 per 10 grams on Wednesday in the national Capital. On Tuesday, the precious metal of 99.9% purity had jumped by Rs 1,800 to touch a lifetime high of Rs 1,15,100/10 grams, in the Delhi bullion market. Silver too gave up gains and drifted lower, with profit-taking weighing on sentiment. The white metal slumped Rs 1,670 to Rs 1,31,200/kg. In the previous day, it had scaled a new record of Rs 1,32,870/kg, rising Rs 570.
Gold has traded weak on profit booking ahead of the crucial Fed policy decision, as participants trimmed risk before the outcome. The sentiment remains cautious, with markets awaiting not just the rate cut but also the Fed's forward guidance on further easing. Any neutral stance or less dovish comments without a clear roadmap for additional rate cuts could trigger a couple of percentage points of downside in bullion, said Jateen Trivedi of LKP Securities.
Globally too, gold and silver also saw a pullback after hitting fresh peaks Tuesday, as investors stayed cautious ahead of the Fed policy announcement later in the day today. Spot gold slipped nearly 1% to $3,664.82/ounce (28.35 grams) after scaling an all-time high of $3,703.23 on Tuesday. Silver too dropped by nearly 3% to $41.38/ounce.
Spot gold eased slightly to $3,664/ounce as the dollar attempted a recovery from near its lowest level in three years ahead of the Fed Federal rate decision. Investor attention now turns to the Fed chair Jerome Powell's post-decision press conference and the updated dot plot, with markets seeking guidance on the Fed's policy path through the remainder of 2025," said Kaynat Chainwala of Kotak Securities.
Praveen Singh of Mirae Asset Sharekhan said, the Fed is expected to slash the benchmark rate by 25 bps, but Fed governors Stephen Miran and Michelle Bowman may dissent to pave the way for aggressive interest rate cuts later.