Gold prices remain subdued as investors await the release of the US Federal Reserve's June policy meeting minutes this week. The minutes are anticipated to shed light on the central bank's stance regarding interest rates and monetary policy.
Adding to market concerns, US manufacturing contracted in June, reaching a three-year low. The economic indicators and expectations are hinting at a 90% probability of a 25 basis points rate hike by the US Federal Reserve in July.
"Gold has probably found a home around 1900," said Edward Moya, senior market analyst at OANDA. "There's some positioning happening here and the market last week seemed to be slowly pricing in more Fed rate hikes. But the data going forward suggests that may not happen, and we could get really get one more rate hike."
Gold Price in India
In Ahmedabad, gold prices stood at Rs 60,150 per 10 grams for 24 carat gold and Rs 55,100 per 10 grams for 22 carat gold.
What is Support Gold Prices?
What is also supporting the safe-haven demand for gold is the difference between the yields of the 2-year and 10-year U.S. Treasury notes, which reached its widest level since 1981. This reflects concerns that a prolonged cycle of rate hikes by the Federal Reserve could push the United States into a recession.
In May, futures markets were anticipating rate cuts at the Fed's September meeting, but the current projections indicate that the first cuts may occur in January. The decline in interest rates typically boosts the appeal of gold as it reduces the opportunity cost of holding the non-yielding asset.
Furthermore, gold received a boost from a decrease in the value of the dollar following the release of data indicating a further decline in U.S. manufacturing activity in June.
Carlo Alberto De Casa, an external analyst at Kinesis Money told Reuters that there is a possibility that gold prices may fluctuate within the range of $1,900 to $1,930 until the release of the minutes from the Federal Reserve's meeting held on June 13-14. These minutes are expected to provide additional insights into the central bank's policy direction.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
