Ahead of the US Fed meeting, pressure is on the gold and silver rates today. Will the price of gold reach a new high before Diwali in 2023?

 Ahead of the US Fed meeting, pressure is on the gold and silver rates today. Will the price of gold reach a new high before Diwali in 2023?

Gold rate today: During early morning trading, the price of gold saw a sell-off ahead of today's US Federal Reserve meeting. The December 2023 gold futures contract on the Multi Commodity Exchange (MCX) began at ₹61,117 per 10 gm, down from its opening price. However, within a few minutes of the commodities market opening bell today, the MCX gold prices recovered and reached an intraday high of ₹61,199 per 10 gm, having previously touched an intraday low of ₹61,110. The current price of gold fluctuates at 1,992 per ounce on the global market.

Similarly, the price of silver on MCX began lower today at ₹72,492 per kg, and during morning transactions, it dropped as low as ₹72,433 intraday. The price of silver is bouncing at $23.15 per ounce on the global market.

Why is the price of gold now under pressure?

Anuj Gupta, Head of Commodities & Currency at HDFC Securities, explained why gold and silver prices are under attack today: "Retracement in gold and silver prices today should be interpreted as a cool off effect as bullion prices were consistently rising last week." Thus, rather than any indication of weakness in bullions, it is more of a profit booking ahead of the US Fed meeting."

US Fed meeting under scrutiny

Anuj Gupta of HDFC Securities said, "US Fed is expected to maintain its rate pause stance in its meeting starting today." This is what the market is anticipating from the US Fed meeting. But its comments will play a significant role. The US Fed typically doesn't raise interest rates in December because of book closing. The market thus assumes that a rate rise by the US Federal Reserve would only occur in the following year if it does not occur at its meeting in November. We may anticipate a substantial global increase in the price of gold and silver if the US Federal Reserve gives any indication of this kind in the minutes of its most recent FOMC meeting."

Anticipating a return from the levels of support for the prices of gold and silver, Axis Securities' Research Analyst for Commodities, Deveya Gaglani, said, "Despite a strong US dollar index, gold prices have remained resilient." Due to the perceived safe haven quality of gold in light of the current geopolitical and economic unrest, investors flocked to it. Gold prices will continue to shine since Israel has begun its ground assault in Gaza, which has increased tension in the Middle East.

Possibility of purchasing for Diwali 2023?

According to Anuj Gupta of HDFC Securities, the international gold market has immediate support at levels of $1,980 per ounce, while the MCX gold rate has support around ₹60,500.

Regarding whether or not to begin purchasing gold and silver for Diwali 2023, Anuj Gupta advised waiting for the US Federal Reserve's response. In the near future, gold prices might reach ₹62,000 and ₹63,000 per 10 gm, respectively, if the commentary is in line with market expectations and the rate rise is postponed until next week."

Will the gold rate on the MCX reach a new high?

The MCX gold rate reached a new height of ₹61,845 per 10 gm in May 2023, according to Anuj Gupta of HDFC Securities. This is remains the record high for the instrument. Therefore, if the results of the US Fed meeting match what the market anticipates, gold prices should reach a new high by Diwali 2023.

Anuj Gupta provided the following analysis on the prognosis for silver prices: "Silver price has resistance at ₹73,000 and ₹75,000 per kg levels, while support is located at ₹71,000 and ₹70,000 per kg levels."