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Key Points

Gold prices slipped after the Fed signaled a slower pace for rate cuts, keeping markets cautious. Jerome Powell stressed inflation data will dictate future policy moves, tempering investor optimism. Geopolitical tensions between Israel-Iran and Russia-Ukraine added volatility, while silver also saw a sharp decline. Analysts noted domestic prices remained supported by rupee weakness despite global headwinds.

Key Points: Gold Prices Drop as Fed Signals Slower Rate Cuts Amid Inflation

  • Fed holds rates steady but signals fewer cuts ahead
  • Geopolitical tensions weigh on gold despite safe-haven appeal
  • Silver drops below $35.70 amid investor liquidation
  • Rupee weakness supports domestic gold and silver prices
3 min read

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

Gold and silver decline as Fed Chair Powell adopts cautious stance on rate cuts, with geopolitical tensions and economic data influencing market trends.

"Powell emphasised that these forecasts are highly data-dependent, especially on inflation trends. – Manav Modi, Motilal Oswal"

New Delhi, June 20

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

- IANS

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Reader Comments

Here are 6 diverse Indian perspective comments for the gold price article:
P
Priya K.
As someone who was planning to buy gold for my sister's wedding, this dip is welcome news! But I wonder if I should wait more - my local jeweler says prices might fall further if US inflation data comes better than expected next month. 🤔
R
Rahul S.
The Fed's cautious approach makes sense but it's hurting middle-class investors like me who put money in gold ETFs. Our markets are too dependent on US monetary policy - RBI should consider more independent measures to stabilize gold prices.
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Anjali M.
Gold prices may be falling internationally but in India, the weak rupee is offsetting much of the benefit. My 10gm gold purchase last month still costs about the same today despite the global dip. Currency fluctuations matter as much as Fed decisions!
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Vikram J.
Interesting analysis but misses the Indian wedding season factor! Even with Fed decisions, demand will pick up from August for festivals and weddings. Smart buyers should track both global trends and local demand cycles. 🪙
S
Sneha P.
The article gives good technical levels but I wish it explained more about how ordinary Indians can benefit from these price movements. Most of us buy physical gold, not trade in futures. Practical advice would help more than resistance/support levels.
K
Karan D.
With elections in US and India this year, plus Middle East tensions, gold will remain volatile. Better to make small regular purchases rather than time the market. As my grandfather used to say - "sona kabhi bhi kharido, par chhota chhota" (buy gold anytime, but in small amounts).

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