Gold Prices Rise In India; Price Of Yellow Metal May Touch Rs 64,000 In 2024; Should You Buy Gold Now?

Gold prices in India increased on Thursday (December 28) as the price of the precious metal surged in the global market touching the highest level in over 3 weeks as the US dollar and bond yields hit multi-month lows in anticipation of U.S. interest rate cuts next year.

Gold Futures, maturing on February 5, 2024, were up 0.03% at 63694 on the Multi Commodity Exchange (MCX) at 1:37 pm IST today.

London's gold price benchmark touched an all-time high of $2,069.40 per troy ounce at an afternoon auction on Wednesday, surpassing the previous record of $2,067.15 set in August 2020, said the London Bullion Market Association (LBMA).

On Wednesday, Spot gold was up 0.5% at $2,086.66 per ounce, while the US gold futures rose 0.2% to $2,097.10 an ounce. In India, the price of 10 grams of 24-carat gold at the time of writing this article is Rs 64,250. The price of the same quantity of 22-carat gold and 18-carat gold in the country is Rs 58,900 and 48,190 respectively.

The non-yielding Bullion seems to be on track to log its best year since 2020 with a 14% gain, as the war in Ukraine and tensions in the Middle East boosted safe-haven inflows and bets of US rate cuts lifted the appeal for the precious metal.

Gold rates today in different Indian cities:

Today, the gold price in Delhi for 24-carat gold (10 grams) is Rs 64,400, while 10 grams of 22-carat gold in the national capital costs Rs 59,050. The gold rate in Delhi is at par with the price of gold in Chandigarh, Jaipur, and Lucknow.

Gold prices in Bangalore for 24-carat gold (10 grams) is Rs 64,250, while 10 grams of 22-carat gold in the national capital costs Rs 58,900. The gold rate in Bangalore is at par with the price of gold in Hyderabad, Kerala, and Kolkata.

In Chennai, the price of 10 grams of 24-carat gold is Rs 64,850, while the price of the same quantity of 22-carat gold in the city is Rs 59,450.

Gold likely to rise towards Rs 63,800

According to the brokerage firm ICICI Direct Research MCX Gold Mini February is expected to rise towards Rs 63,800, as long as it trades above 62500. A move above 63800 would open the doors towards 64,000.

Gold Outlook For 2024

According to Research analysts at ICICI Direct Research Gold prices are expected to rise towards the $2100, as long as they hold above the $2030 mark amid weakness in the dollar and a decline in US treasury yields. The dollar is losing its strength amid increasing bets of more than 3 rate cuts by the Fed in the coming year.

As per the CME Fed-Watch toll, the rate cut in March has moved up to 74% from last week's reading of 67%. The softness in the key inflation numbers would push the Fed to ease the monetary policy and cut the rates as early as March 2024. This week, we don't expect any major movement in the prices as there are no major economic events in the last trading week of 2023.

MCX Gold Mini February is expected to hold the support of 62,500 and move further towards 63,800. A move above 63,800 would open the doors towards 64000.

Gold Outlook 2024 By Quantum Asset Management Company

According to Quantum AMC, key factors including the US economy and Fed policy, Geopolitics & Central Bank demand will drive gold prices in 2024.

Price drivers in 2024

US economy and Fed policy

Fixed income market's classic recession indicator, the 10-year- 2-year Treasury yield curve has been signaling a US recession since July 2022. The cumulative effects of the Fed's rate hiking campaign of 2022 and 2023 are expected to show up soon.

With US economic data incrementally showing signs of cooling off, the deterioration in US growth is expected to become apparent in the first two quarters of 2024. Both the US slowdown and the resulting Fed easing are likely to make conditions conducive for gold prices in 2024 as the attractiveness of competing asset classes diminishes.

Geopolitics & Central Bank demand

With the ongoing geopolitical crises, risk assets will stay vulnerable to escalations. As such, we can expect a structural risk premium to get embedded in gold prices.

We expect strong central bank gold demand to act as soft support for gold prices as it did in 2023.

What should investors do?

Gold can be a useful asset to hold in 2024. As interest rates peak and the timing and extent of rate cuts remain uncertain, it can provide an opportunity for markets to speculate, creating volatility across asset markets, including gold.

Markets can oscillate between optimism and pessimism creating wild short-lived swings in gold prices on either side. Use these swings wisely to build your allocation to gold which can benefit from the eventual turn in Fed policy, which is now a given at some point next year.