Indian gold futures hit a record high today, tracking gains in overseas market. Domestic gold futures rose to ₹56,245 per 10 grams, surpassing the previous record of ₹56,191 hit in August 2020. Gold rates have rallied since November, supported by a weaker dollar and expectations of slower interest rate hikes by the U.S. Federal Reserve.
But the price rise has dampened demand in the world’s second biggest consumer of the precious metal, dealers said.
Data released on Thursday showed that U.S consumer prices fell for the first time in more than two years in December, offering hope that inflation will soften going forward. The Fed had raised rates by 75 basis points (bps) four times last year, before slowing to a 50 bps increase in December.
“The major supportive factor for gold’s rise was the US CPI print that came in as per the expectation. As per the report, US CPI rose 6.5% in December as compared to 7.1% in Nov (Y-o-Y). The print was the lowest since Oct 2021. Slowing inflation means less aggressive interest rate hikes by Fed. A per the CME Fed watch tool the probability of a 25-bps hike in Feb FOMC meeting has gone up to 92.7%. This has supported gold prices to trade above the resistance of $1884/oz which is the 8-month high,”said Ravindra V. Rao, Head Commodity Research, Kotak Securities Ltd.
“The bulls might now target the next resistance near $1920/oz. Support now is pegged near $1870/oz. Break of $1870/oz on closing might indicate a false breakout,” he added.
