Gold prices edged higher on Monday, December 16, as investors prepared for a likely interest rate cut by the US Federal Reserve later this week. The focus is now on the Fed’s tone regarding future rate cuts, which could influence market movements.
Spot gold was up 0.1% at $2,650.86 per ounce as of 0532 GMT. However, US gold futures slipped 0.2% to $2,669.00. The modest gains in spot gold reflect cautious optimism, as traders anticipate a 25-basis-point rate cut, widely regarded as a certainty. “A 25 basis point rate cut this week has been fully priced by markets, so the focus will be on whether this will be a 'hawkish cut,'” said Yeap Jun Rong, Market Strategist at IG. He added that US policymakers might adopt a cautious approach given persistent inflation, economic resilience, and uncertainties over geopolitical developments. Citi analysts echoed this sentiment, noting that gold demand will likely remain robust until global economic growth stabilizes. Citi expects precious metals to peak between fourth quarter of FY25 and first quarter of FY26. Gold prices in India In India, gold prices declined marginally. The rate for 24-carat gold is ₹7,805.30 per gram, down ₹10 from the previous session.
Similarly, 22-carat gold is priced at ₹7,156.30 per gram, marking the same ₹10 decline. Rahul Kalantri, VP Commodities at Mehta Equities Ltd., noted that the recent correction in gold prices followed stronger-than-expected US Producer Price Index (PPI) data. The rally in the Dollar Index to 106.80 further pressured bullion prices. "Gold has support at $2,634-$2,620 per ounce, with resistance at $2,664-$2,680 per ounce. In India, gold's key support is at ₹76,860-₹76,640 per 10 grams, with resistance at ₹77,350-₹77,540 per 10 grams," Kalantri explained. Geopolitical and economic drivers Geopolitical concerns, such as ongoing tensions in Gaza, have added to gold's safe-haven appeal. Israeli strikes in Gaza have escalated, contributing to global uncertainty. Additionally, China's stimulus measures and the Bank of England's (BoE) rate decision are expected to play a pivotal role in influencing gold prices. Renisha Chainani, Head of Research at Augmont, highlighted the role of the US Dollar Index in gold price trends. “If the current uptrend holds, gold may rebound from ₹77,100 per 10 grams towards ₹79,000 per 10 grams. However, if prices fall below ₹77,100 per 10 grams, the next target is ₹75,000 per 10 grams,” she said. Investment outlook Gold continues to attract investors as a hedge against economic downturns and equity volatility. With central banks worldwide navigating interest rate challenges, non-yielding assets like gold benefit in a low-rate environment. The yellow metal presents buy-on-dip opportunities around support levels while encountering resistance at higher thresholds.
