Gold Prices Hit One-Month High Despite Strong US Dollar; MCX Gold Eyes Record Levels

Speculation of US Fed rate cuts and economic uncertainties surrounding Trump’s inauguration fuel a continued rally in gold prices.

January 18, 2025: Gold prices in both domestic and international markets continued their upward momentum over the past week, even as the US dollar strengthened. On Friday, the MCX gold rate closed at ₹79,019 per 10 grams, marking a 0.80% weekly gain compared to ₹78,400 last week. In the international market, COMEX gold settled at $2,748.70 per troy ounce, while spot gold ended at $2,701.55 per ounce.

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Experts attribute the rally to the weakening Indian Rupee (INR) and market optimism about upcoming US Federal Reserve rate cuts, bolstered by softer US inflation and retail sales data for December 2024. Speculation is also rife about potential policy changes following Donald Trump’s inauguration as the 47th US President on January 20, 2025.

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Key Drivers of the Gold Rally

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1. US Core Inflation Decline:
   According to Sugandha Sachdeva, Founder of SS WealthStreet, gold prices sustained gains despite a stronger US dollar due to declining US core inflation, which fell to 3.2% in December from a six-month average of 3.4%. Lower inflation and softer retail sales data bolstered hopes of a dovish Fed stance.
2. US Treasury Yields and Fed Rate Speculation:
   Kaynat Chainwala, AVP-Commodity Research at Kotak Securities, noted a decline in US Treasury yields, further fueling expectations of two Fed rate cuts by the end of 2025. Unemployment claims also exceeded forecasts, further supporting rate cut speculation.
3. Economic Uncertainty Around Trump’s Policies:
   The markets are closely monitoring Donald Trump’s upcoming inauguration, with potential policy shifts likely to influence inflation, a key driver for gold prices.
4. INR Weakness Boosts MCX Gold Prices:
   The depreciation of the Indian Rupee added extra momentum to domestic gold prices, allowing MCX rates to outperform global gold price gains.

Technical Analysis and Levels to Watch

Gold prices tested resistance at $2,725 per ounce in international markets. A break above this level could trigger further buying interest, while a dip below $2,660 per ounce may lead to corrections.

In the domestic market, gold prices closed near ₹79,200 per 10 grams, a key resistance level. According to Sugandha Sachdeva, a breach of this level could lead to record highs, while failure to break it might trigger a downward correction.

Outlook

With speculation of Fed rate cuts and global economic uncertainties, gold prices are poised for further volatility. Investors are advised to monitor upcoming US economic indicators and Trump’s policy announcements for potential impacts on the yellow metal’s trajectory.

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Gold price today, MCX gold rate, US Fed rate cut, Trump inauguration, international gold prices, gold market trends, Indian Rupee, US dollar impact, inflation and gold, gold investment