Fed Rate Cut, Federal Reserve meeting, Fed Meeting Outcome: As anticipation builds around the US Federal Reserve’s upcoming rate decision, Gold Price Today conducted a poll among India’s leading commodity analysts. The majority, 17 out of 28, expect a 0.25% rate cut, while 11 foresee a more aggressive 0.5% reduction. The expectation of a smaller 0.25% cut is increasing, supported by recent global economic data that suggests gradual improvement. However, the Fed Watch Tool indicates that 65% of respondents favor a 0.5% rate cut, while 35% support a 0.25% cut, showing a clear divide in opinion.
The Federal Reserve is set to announce its decision today at 11:30 PM India time, followed by a press conference at midnight.
A 0.5% rate cut, while possible, could signal deeper concerns about the economy and trigger negative sentiment in the markets. Analysts believe such a large cut may indicate fears of a significant slowdown. A review of every Fed rate cut since 1990 reveals an interesting pattern: in four instances, the first cut was 0.25 basis points, while in another four instances, it was 0.50 basis points. However, the 50bps cuts occurred during significant economic crises, such as the dot-com bubble in 2001, the global financial crisis in 2007, and the COVID-19 pandemic in 2020. These larger cuts were implemented in response to severe economic downturns, highlighting the Fed’s more aggressive approach during times of major financial distress.
Gold and Silver Pause Ahead of Fed Decision
Ahead of the Federal Reserve’s two-day meeting, which began on Tuesday and will conclude with rate cut decisions on Wednesday, the gold and silver markets have paused their recent rally. Manoj Kumar Jain, Director of Prithvi Finmart, observed weakness in both the US dollar index and 10-year bond yields, hinting at a potential larger rate cut in this policy meeting.
Despite missing expectations on US retail and core retail sales data, industrial production posted positive growth, providing some support to precious metal prices. Jain expects gold and silver prices to remain volatile ahead of the Fed’s announcement, but believes that key support levels for both metals will hold on a weekly basis.
Gold and Silver Technical Outlook
According to Manoj Kumar Jain, gold has support at $2,574–2,558 per troy ounce, with resistance at $2,610–2,622. Silver, meanwhile, has support at $30.64–30.20, with resistance at $31.40–31.84 per troy ounce. On the MCX, gold is expected to find support at ₹72,800–72,580, with resistance at ₹73,300–73,550, while silver has support at ₹88,450–87,700 and resistance at ₹89,950–90,500.
Jain advises investors to remain cautious and avoid making trades in gold and silver until the outcomes of the Fed meeting are clear, as market volatility is likely to spike.
Kedia Advisory Market Update:
Gold trading range: ₹72,550 – ₹73,870
Gold prices eased as the dollar and Treasury yields edged slightly higher.
U.S. retail sales unexpectedly rose in August, signaling a strong economic foundation.
Traders are positioning for a potential interest rate cut by the U.S. Federal Reserve.
Silver trading range: ₹88,265 – ₹90,355
Silver prices dipped as the dollar steadied following a four-day decline.
U.S. manufacturing production increased by 0.9% in August 2024, while industrial production rose by 0.8% month-on-month.
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