Gold prices extended their rally today, driven by expectations of a U.S. Federal Reserve rate cut following the release of U.S. Consumer Price Index (CPI) data. Early morning trading saw the MCX gold rate open higher at Rs.75,660 per 10 grams and quickly climb to Rs.75,894. In the international market, spot gold surged by 1.45%, reaching $2,645 per troy ounce.

Experts in the commodity market have indicated that the U.S. CPI data aligned with expectations, and weakening job numbers are contributing to speculation about a potential Fed rate cut. Analysts predict the MCX gold rate could soon hit Rs.76,000 per 10 grams, while the spot gold price might approach $2,700 per troy ounce in the near future.

Factors Driving Gold Prices
Explaining the reasons behind the rise in gold prices, Alex Ebkarian, chief operating officer at Allegiance Gold, said, "The CPI report didn't bring much surprise, and the weakening job numbers suggest the Fed may be on track to cut rates, helping gold prices rally." He added that the recent dip in gold’s rally has positioned the metal to rise again.

Geopolitical events and strong demand, particularly from central banks, are also fueling the upward trend in gold prices, Ebkarian noted.

Key Price Levels to Watch
For investors, the 'buy-on-dips' strategy is being advised. Anuj Gupta, Head of Commodities & Currency at HDFC Securities, said, "Gold prices are on an upward trend, and any decline should be seen as a buying opportunity. The MCX gold rate has crucial support at Rs.74,800 per 10 grams, while it faces resistance at Rs.76,000. In the international market, spot gold is supported at $2,635 to $2,640 per troy ounce, with expectations of reaching $2,700 soon."

The U.S. consumer price report showed a slight increase, but the annual inflation rise was the smallest in over three and a half years. Weekly jobless claims also increased to 258,000, further strengthening the chances of a Federal Reserve rate cut.

According to the CME FedWatch tool, there is now an 80% likelihood of a 25-basis-point rate cut from the Fed next month, up from 76% before the data release. This trend makes zero-yield investments like gold more attractive as interest rates fall.

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