Gold prices slip after US Fed signals more gradual path for rate cuts

New Delhi: Gold prices slipped after the US Federal Reserve kept interest rates unchanged and signalled a more gradual path for rate cuts, analysts said on Friday.

US Fed Chair Jerome Powell noted the central bank expects an increase in inflation in the coming months amidst tariffs and other factors, reinforcing a cautious policy stance. While markets initially responded with optimism, Powell tempered expectations by reiterating that with low and stable unemployment, the Fed is well-positioned to wait for more data before making any moves.

Though he hinted that September could be a “live” meeting, however market participants have been discounting the same since sometime. Fed still anticipates rate cuts totaling 50 basis points in 2025, but now sees only 25 basis points of easing each in 2026 and 2027.

“Powell emphasised that these forecasts are highly data-dependent, especially on inflation trends. Meanwhile, geopolitical developments added to market uncertainty, as President Donald Trump floated the idea of meeting with Iran over the Iran-Israel conflict, and Russian President Vladimir Putin expressed readiness for substantive peace talks with Ukraine,” said Manav Modi, Senior Analyst, Commodity Research at Motilal Oswal Financial services Ltd.

There is still no resolution on the Israel and Iran and the war like situation continues however expectations of an ease off is weighing on prices.

“US weekly jobless claims also was reported lower than expectations giving a jerk to prices. Volatility could be lower today as US markets remain shut on the back of public holiday,” he mentioned.

According to Rahul Kalantri, VP Commodities, Mehta Equities Ltd, gold and silver prices slid from recent highs, nearing one-week lows and heading for their first weekly decline in three weeks.

Silver prices fell below $35.70 per ounce after a sharp rally earlier in the week. The decline came as investors liquidated positions in bullion to cover losses elsewhere amid rising geopolitical tensions between Israel and Iran. “The Bank of England also held rates steady in its monetary policy meetings on Thursday which also limited gains of precious metals. However, escalation of the Israel-Iran war and weaker dollar index are supporting safe-haven buying for precious metals. Weakness in the rupee is also supporting prices of gold and silver in the domestic markets,” Kalantri explained.

Gold has support at $3340-3315 while resistance is at $3380-3400. Silver has support at $35.75-35.50 while resistance is at $36.35-36.55.

“In Indian rupee terms, gold has support at Rs 98,750-98,550 while resistance is at Rs 99,550-99,740. Silver has support at Rs 106,380-105,500 while resistance is at Rs 1,08,350-1,09,000,” he noted.

IANS