Gold Cheers Up Post Rate Hike

Published on Jul 27, 2023 13:48

Gold futures jumped past $1980 an ounce in midday Asia, cheering up after the much expected rate hike and comments from Fed Chair Jerome Powell indicating that they are open for further rate hikes.

The rise marked the third consecutive session of gains, driven by a weakening dollar and the US Federal Reserve`s anticipated 25 basis point rate hike. Federal Reserve Chair Jerome Powell mentioned the possibility of further rate increases in the future, emphasizing that future decisions would be dependent on economic data. Powell also expressed that the economy would need to slow and the labor market to weaken for inflation to return to the target of 2%. Despite this, he no longer predicts a US recession.

Weakness in US dollar boosted gold and all the dollar traded commodities. The Dollar index was seen trading at 100.43 down 0.19% against the basket of 6 major currencies. COMEX most active gold contract jumped to as high as $1982.60 an ounce in today session, whereas MCX gold futures jumped to as high as Rs 59680 per 20 grams and was last seen trading up Rs 199. The resistance are seen near Rs 59900 levels.

Investors are now turning their attention to the European Central Bank`s policy decision, where additional rate hikes are expected due to ongoing inflation concerns. On the other hand, the Bank of Japan is likely to maintain its ultra-easy monetary policy in its upcoming meeting on Friday.