Gold Prices Dip as US Dollar Rebounds Amid Rate Cut Speculation and Tariff Concerns

After reaching record highs, gold prices see a decline as the US dollar rebounds. Experts predict further volatility driven by US Fed policy and tariff uncertainties.

January 27, 2025: After hitting a record high of ₹80,312 per 10 grams last Friday, gold prices witnessed a dip due to profit-booking triggered by a rebound in the US dollar. On Monday morning, the MCX gold rate opened lower at ₹79,859 per 10 grams and fell further to ₹79,765. In the international market, spot gold was priced at $2,761 per ounce, while COMEX gold stood at $2,794 per troy ounce.

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According to market experts, while gold prices have pulled back, the overall sentiment remains bullish due to ongoing US economic uncertainties, tariff tensions, and speculations of a Federal Reserve interest rate cut.

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US Fed Rate Cut Buzz and Tariff Impact
Anuj Gupta, Head of Commodity & Currency at HDFC Securities, highlighted the influence of recent comments by US President Donald Trump. Speaking at the World Economic Forum in Davos, Trump hinted at the possibility of a Federal Reserve rate cut in the upcoming monetary policy meeting. This led to a sell-off in the US dollar, pushing the dollar index to a five-week low and boosting the safe-haven appeal of gold.

Further compounding the uncertainty are the escalating trade tensions, with the US planning to impose a 25% tariff on imports from Mexico and Canada starting February 1, 2025. According to Sugandha Sachdeva, Founder of SS WealthStreet, “These tariffs could disrupt global trade and contribute to inflationary pressures in the US economy, further driving demand for gold.”

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Key Price Levels and Investment Strategies
Experts suggest that gold prices in the international market have critical support at $2,740 per ounce, with resistance at $2,790. A breakthrough above this level could push prices to $2,800 in the near term. In the domestic market, gold faces resistance at ₹80,500 per 10 grams and support at ₹79,200.

For short-term investors, Sugandha Sachdeva recommends a phased buying approach during price dips to maximize returns while safeguarding portfolios. She added, “A breakout above ₹80,500 could drive prices to ₹81,200 per 10 grams. However, failure to sustain above this level might result in profit-booking, with prices retracing to ₹79,200 or ₹78,500.”

Outlook
While short-term fluctuations may occur, gold remains a favored investment amid global economic uncertainties. Investors are advised to monitor developments around US Fed policy and international trade dynamics for further price movement insights.

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