E-Paper
Why is gold price falling today after US Fed meeting outcome? Explained
This comes as US Fed maintained the status quo on interest rates and its commentary remained hawkish on rate cuts in 2024.
Gold price witnessed a sharp fall today following cues from a hawkish stance of the US Fed on interest rate . Gold futures contract on the Multi Commodity Exchange (MCX) for August 2024 expiry opened at ₹71,475 per 10 gm and touched an intraday low of ₹71,40. In the international market, spot gold price were around $2,315 per ounce whereas the Comex gold price are near $2,330 per troy-ounce mark.
Read more: Income Tax Return: What is Form 26AS? How to download it to file ITR
This comes as US Fed maintained the status quo on interest rates and its commentary remained hawkish on rate cuts in 2024 as policy markers shifted from three possible rate cuts this year to just one. Following this, there was an increase in US dollar rates and Treasury yields which have impacted gold prices.
Read more: Adani Group plans major cement acquisitions with $3 billion investment: Report
Anuj Gupta, the Head of Commodity & Currency at HDFC Securities, said as per Mint, "The drop in gold prices today is a direct result of the US Federal Reserve's meeting outcome. The Fed had initially announced three rate cuts in 2024, but in their recent commentary, they have revised this to just one. This change has led to an increase in US dollar rates and Treasury yields, causing gold prices to fall."
Read more: Sam Altman tells employees: OpenAI to earn $3.4 billion, revenue has doubled
Dhawal Ghanshyam Dhanani, Fund Manager at SAMCO Mutual Fund, said, “The US Fed decided to hold benchmark rate in 5.25-5.50% target range (for a 6th consecutive meeting), unlike European Central Bank which became the fourth major central bank to cut its policy rate after Switzerland, Sweden and Canada last week. Until now, the market priced for 1-2 rate cuts by December; however, the Fed recommended 2-3 cuts back in March via their 'dot plot'. To the surprise of many, the Fed indicated a big hawkish stance by suggesting just one rate cut coming this year versus three in March — cementing higher for longer rates for the markets.”
