Gold prices moved up in the morning session in the domestic futures market on Wednesday, January 3, tracking positive global cues ahead of the minutes from the Federal Reserve’s latest policy meeting and the US jobs data.
Weakness in the domestic equity market and geopolitical news also influenced gold prices. According to media reports, Israel killed Hamas deputy leader Saleh al-Arouri in a drone strike in Lebanon’s capital Beirut on Tuesday.
Investors are eagerly waiting for various important US economic reports this week to get cues on whether the Fed will start rate reduction in the first half of the year or not.
According to the media reports, the CME’s Fed watch tool shows traders pricing in an over 70 per cent chance that the Fed will cut rates by 25 bps in March.
Geopolitical uncertainty and rate cuts are favourable for gold prices.
Geopolitical tensions affect global trade and the economy and weigh on market sentiment. This prompts investors to steer clear of riskier stocks and turn towards safe-haven assets like gold. Additionally, when interest rates are low, the cost of holding gold is reduced, making gold an even more appealing option for investors.
Around 10:15 am, Multi Commodity Exchange (MCX) Gold for February 5 series traded 0.12 per cent higher at £601 per 10 grams.
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