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Gold prices opened on the Multi Commodity Exchange (MCX) on Thursday at Rs 61,407 per 10 grams and hit an intraday low of Rs 61,284. In the international market, prices hovered around $1,992.73 per troy ounce.

Meanwhile, silver opened at Rs 70,300 per kg and hit an intraday low of Rs 70,013 on the MCX. The price hovered around $22.42 per troy ounce in the international market.

Manav Modi, Analyst, Commodity and Currency, MOFSL, said, “Gold prices hovered below the key $2,000 after hotter-than-expected US inflation data prompted investors to lower bets for early Federal Reserve interest rate cuts. US CPI was reported at 3.1%, better than expectations of 2.9%; US Core CPI was also reported higher. Traders were also seen steadily pricing out early interest rate cuts by the Fed, which leaves gold with little scope for recovery in the near term.”

The dollar shot up to a three-month high and that further weighed on gold; the US 10-year yield was also seen hovering around the 4.3% mark. Chicago Fed President Austan Goolsbee mentioned in his speech that the Fed’s path back to its 2% inflation target rate would still be on track even if price increases run a bit hotter-than-expected over the next few months, and the central bank should be wary of waiting too long before it cuts interest rates.

“The CME Fedwatch tool showed traders scaling back bets on rate cuts in May and June, although traders were still pricing in a 51% chance for a 25 bps cut in June,” said Modi.

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Federal Reserve Vice Chair for Supervision Michael Barr said the US central bank needs to see more data indicating inflation is heading back to 2% before it begins lowering interest rates. According to the CME Fed watch tool, investors are now expecting only 37% odds of a quarter-point Fed rate cut in the May 2024 FOMC meeting. Today, US retail sales data, weekly jobless claims and industrial production data will be in focus, along with speeches from Fed officials.

Ravindra Rao, Head – Commodity Research at Kotak Securities, said, “COMEX Gold prices declined for the fifth day in a row as hawkish comments from Fed officials amid the backdrop of upbeat economic data and hotter-than-anticipated inflation numbers improved the conviction that rates might stay higher for longer and the officials are not in a hurry to cut rates.”

“Meanwhile, heightened geopolitical tensions in the Middle East provided some cushion against prospects of higher rates in the US. Investors might watch for IEA monthly report to be released later today,” said Rao

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