Gold Prices Dip as Fed Signals Slower Timeline for Interest‑Rate Cuts

Gold prices fell below the ₹99,000 per 10 grams level on Thursday even as investors practiced profit booking despite the ongoing tensions between Iran and Israel. The fall also came in the wake of the U.S. Federal Reserve maintaining interest rates at their current level, scotching the yellow metal's recent buoyancy.

On the Multi Commodity Exchange (MCX), gold futures fell ₹804 to ₹98,733 in afternoon trade, from Wednesday's close at ₹99,537. This is a 2.31% fall from the all-time high of ₹1,01,078 hit on June 16.

The geopolitical tensions in the Middle East had previously prompted a gold rally, with investors seeking refuge in the metal amid increasing global uncertainty. But with the Federal Reserve keeping rates unchanged and in effect indicating more conservatism in its stance towards future cuts, attitudes towards gold have started to change.

In international markets, spot gold dropped $17.37 to $3,351 an ounce, down from its last close of $3,368.74.

Expert Reactions and Outlook

Manav Modi, Motilal Oswal Financial Services Senior Analyst, said, "Gold prices fell after the US Federal Reserve left interest rates unaltered and indicated a more gradual rate-cut pathway. Fed Chairman Powell pointed out the central bank is anticipating a rise in inflation in the coming months due to tariffs and other events supporting a hawkish policy stance."

Maneesh Sharma, AVP – Commodities & Currencies at Anand Rathi Shares and Stock Brokers, said, "Gold prices registered weak gains after the Fed announced a decision to hold interest rates steady, while stating they are still debating two rate cuts. However, US President Donald Trump's statement regarding Iran resulted in a pullback towards a weekly low yesterday, yet tensions remain high as Iran continues to attack Israel."

Sharma further explained that decreasing trading volumes in U.S. markets because of the holiday season could also lead to more price volatility. "Looking forward, we could see some more pullback in prices on thin liquidity conditions in US markets because of holiday there," he explained.

The recent "hawkish pause" by the Fed may drive the U.S. dollar higher, placing even more strain on gold prices. According to analysts, spot gold may be headed lower in the short term, threatening to hit $3,310–$3,290 an ounce.

Forecasts and Longer-Term View

Global financial institution Citi has lowered its gold forecasts, attributing lower investment demand and improving global growth conditions for the revision. The bank currently forecasts gold to drop below $3,000 an ounce by the end of 2025 or early 2026. In a recent report, Citi reduced its short-term (0–3 month) and medium-term (6–12 month) targets from $3,500 to $3,300 and from $3,000 to $2,800 an ounce, respectively. For Q3, it sees a consolidation of $3,100–$3,500 before a more extended downtrend resumes.

Aksha Kamboj, India Bullion and Jewellers Association Vice President and Aspect Global Ventures Executive Chairperson, noted that while the Fed suggested two interest rate cuts in 2025, gold has been unable to hold on to gains. "Gold prices continue to be stuck in a tight, downward trend. With the Fed news now behind us, market focus is back on rising geopolitical tensions. Any development toward a ceasefire could further depress bullion prices," she stated.

Technical Indicators and Market Range

Rahul Kalantri, VP – Commodities at Mehta Equities, pointed out major support and resistance levels for gold. Internationally, support is at $3,345–$3,320 and resistance at $3,400–$3,422. In Indian markets, gold is supported at ₹98,950–₹98,690 and has resistance around ₹99,950–₹1,00,240.

Jateen Trivedi, VP and Research Analyst at LKP Securities, mentioned three major drivers that would decide the short-term direction of gold: