The price of 24-carat gold in India was ₹68,440 per 10 grams on Tuesday (July 30), while 22-carat gold was priced at ₹62,737 per 10 grams. This decrease followed the Indian government’s recent decision to cut import duties, initially leading to a reduction in gold prices domestically.

Global market conditions

Globally, gold struggled for momentum on Tuesday, July 30, as investors awaited signals from the US Federal Reserve’s policy meeting and upcoming data releases.

Spot gold was down 0.1% at $2,380.31 per ounce, while US gold futures remained stable at $2,377.30 as of 0156 GMT.

The Federal Reserve is expected to keep interest rates steady at the conclusion of its two-day meeting but may signal potential easing by September as inflation nears its 2% target.

Investors are also focusing on a series of employment data releases this week, with the nonfarm payrolls report on Friday being particularly significant.

Tim Waterer, KCM Trade’s chief market analyst, noted, “The tone of the Fed meet and Friday’s jobs report could pull the rug out from underneath the US dollar if investors start to price in more rate cuts between now and year-end.”

“Any moves lower in the dollar would likely provide a boon to gold, which could again see levels north of $2,400,” he was quoted as saying in a Reuters report.

Interest rates and gold

Lower interest rates decrease the opportunity cost of holding non-yielding assets like gold.

The possibility of interest rate cuts by the Federal Reserve is supporting gold prices, which have been under pressure due to the strength of the US dollar.

Renisha Chainani, Head of Research at Augmont – Gold For All, commented, “Precious metal prices have recovered from last week’s lows, as weak US inflation numbers reiterated market views that the Federal Reserve will lower interest rates in September, driving flows into gold and silver. The better inflation outlook dropped the benchmark 10-year note rates to a nearly two-week low yesterday, undermining the US dollar and benefiting gold and silver.”

Chainani also highlighted the impact of geopolitical tensions on gold prices, stating, “Geopolitical uncertainties associated with Middle Eastern wars provide further support for precious metals. The Golan Heights strike on Saturday has stoked fears of an all-out conflict between Israeli forces and Hezbollah in Lebanon, which further supports the demand for the safe-haven precious metal.”

Key levels for gold prices

According to Chainani, last week’s low of $2,350 per ounce (₹67,400 per 10 grams) will act as a short-term base for gold prices, with strong support expected at this level.

Meanwhile, resistance levels are projected at $2,450 per ounce (₹68,500 per 10 grams) and $2,475 per ounce (₹69,500 per 10 grams).

Investor strategy: Buy, sell, or hold?

The decision to buy, sell, or hold gold depends on individual investment strategies and risk tolerance.

With the potential for interest rate cuts and ongoing geopolitical uncertainties, some investors might consider holding onto their gold investments or even buying more in anticipation of higher prices.

However, the market remains volatile, and the outcome of the Federal Reserve meeting and upcoming economic data releases could significantly impact gold prices.

Jateen Trivedi, VP Research Analyst at LKP Securities, stated, “The Fed’s policy review on July 31st, 2024 (Wednesday), will be in focus, with all eyes set on potential hints regarding September rate cuts. It is expected that rates will remain unchanged in this review meeting.”