Gold Price Outlook: How Fed's 50 Bps Rate Cut Will Drive 22K, 24K, 18K Yellow Metal In Coming Days?

Gold prices in India is likely to see the upside, thanks to the surprise and aggressive rate cut of 50 bps by the US Federal Reserve. As per experts, when the interest rates are lowered, non-yielding assets like gold become attractive against the dollar in the overseas market. Silver prices are also expected to surge in the coming days.

Currently, gold price in India is at Rs 68,500 in 22k of 10 grams, and at Rs 74,730 for 24k of 10 grams. The prices of 22K and 24K have dropped by Rs 3,000 and Rs 3,200 in two days.

Overall, in September month, gold prices are up by 2.30%.

In light of the progress on inflation and the balance of risks, the Fed decided to lower the target range for the federal funds rate by 1/2 percentage point to 4-3/4 to 5 per cent.

Fed has also hinted at two more rate cuts, favouring a 25 bps cut each in 2024. Also, the Fed is expecting a 100 bps cut in 2025, followed by another 50 bps cut in 2026.

Gold Price Outlook:

As per Hareesh V, Head of Commodities, Geojit Financial Services, the US central bank surprisingly cut its benchmark interest rates by 50 bps and hinted more cuts are likely before the end of the year. The Fed chair also noted that the central bank's goal is to keep inflation stable without any adverse effects on the job market.

After the rate cut decision, Harish added, the US dollar turned higher putting pressure on gold like safe commodities. Earlier, there were expectations that lowering rates would cause a decline in the value of US currency and potentially lift the price of gold and silver. Gold in the key London market is trading down by 0.33 percent at $2566 an ounce while silver is down by 0.15 percent at $30.35 an ounce at 08.15am today.

However, he also said, "The surprise rate cut suggests the US Fed is seriously taking the threat of a slowdown to the US economy could boost the haven demand for gold and silver in the immediate run."

At present, gold prices in the international market are hovering near their lifetime highs due to demand optimism amid surging geopolitical tensions, feeble global growth outlook and hopes of a US rate cut, the expert said.

Explaining in detail, Hareesh said, that when there is a decline in interest rates, the opportunity cost of holding non-interest-yielding assets like gold decreases. A super-sized rate cut may further weaken the US currency which is already trading near its weakest level this year. In addition, since gold is traditionally viewed as a hedge against inflation, investors' anticipation of rising inflation due to lower rates tends to further lift the investment demand and thus its prices.

In rate cut outlook, Subho Moulik, CEO of, Appreciate said, while investors would be hankering for bigger cuts, the tone set by Chair Powell, especially his comment that 50 bps won't be the new pace of cuts will be a dampener injecting more volatility and panic in the markets. The action now shifts to the labour market, and more concrete data on the September jobs report (out on October 4) will be another key trigger for the markets.

Gold is a safe-haven asset that usually hedges return uncertainties.

Raghvendra Nath, MD, Ladderup Wealth Management said, "A 50 bps cut is a positive surprise. It indicates the confidence of the Federal Reserve in its policy outcomes over the last two years, as they stood steadfast in their resolve to bring down inflation. With inflation now within the targeted zone, but still a bit away, and Labour market conditions becoming a concern, the cut is coming at an opportune time."

Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have slowed, and the unemployment rate has moved up but remains low, as per Fed. However, it added, inflation has made further progress toward the Committee's 2 percent objective but remains somewhat elevated.