Indian stock markets concluded on a positive note, mirroring gains in global markets, as investors await the crucial US Federal Reserve interest rate decision. The benchmark Sensex and Nifty indices registered modest gains, with sectoral indices exhibiting a mixed trend.

Key market highlights:

• Sensex and Nifty gains: The Sensex climbed 0.35% to 81,741 points, while the Nifty50 advanced 0.38% to 24,951.15 points.
• Sectoral performance: Nifty Metal led the rally, followed by Nifty Pharma and Media. Nifty PSU Bank and Realty lagged.
• Fed rate decision: Investors are keenly watching the Fed’s policy announcement for clues on future rate hikes or potential cuts.
• Technical outlook: The Nifty is consolidating near the 25,000 level, with support at 24,800. A decisive move above 25,000 could trigger a rally towards 25,200.
• Bank Nifty: The banking index remained range-bound, trading below the 21-day EMA. A sustained move above 51,600 could lead to a rally towards 52,000-52,200.

The market displayed a cautious stance ahead of the Fed’s decision, resulting in range-bound trading. Traders are likely to remain watchful for any significant cues from the central bank’s statement.

Indian equities ended on a positive note, with investors adopting a wait-and-watch approach ahead of the crucial Fed decision. While the market exhibited a positive bias, sectoral performance was mixed. The upcoming days will be crucial in determining the market’s direction based on the Fed’s policy outcome and global cues.

Rising optimism for a US Fed rate cut and weakness in US dollar rates have propelled gold prices to a six-week high at $2,391 per ounce in the international market. In the domestic market, gold futures on the Multi Commodity Exchange (MCX) for August 2024 expiry regained the ₹73,000 mark, logging around a 2% weekly gain. On Friday, MCX gold rates surged by ₹671 per 10 gm, finishing at ₹73,038. Similarly, silver prices climbed to a four-week high, ending at $31.20 per ounce in the international market.

Commodity market experts attribute the uptrend in gold prices to the anticipated US Fed rate cut, which has weakened the US dollar. A rate cut typically makes gold more attractive to investors as the US dollar declines. Easing US inflation concerns, fueled by better-than-expected US job data and the US core PCE index showing the lowest annualized increase in over three years, have further supported the gold price rally.

Key factors influencing gold prices

• US Fed Rate Cut: The anticipated rate cut has pressured the US dollar, boosting gold prices. Head of Commodity & Currency at HDFC Securities, noted, “Gold prices in the international market have climbed to a six-week high, and silver rates have touched a four-week high due to easing US inflation concerns, boosting the US Fed rate cut buzz.”
• Market Sentiment: Commodity Researcher at Kotak Securities, highlighted that Comex Gold extended gains amid rising bets on a Federal Reserve rate cut before year-end. “Swaps traders are now pricing in a 70% chance of a rate cut in September,” she said.
• Economic Data: The latest US Nonfarm Payrolls report showed a probable increase of 190,000 jobs last month, with unemployment holding at 4%, the highest in over two years. This data could strengthen the case for the Fed to start cutting interest rates, potentially boosting gold prices further.

The US Consumer Price Index (CPI) data for June is scheduled for releasing in next week. This data will further influence the US central bank’s rate-cut path and, consequently, gold prices. The CPI data will be critical in confirming whether inflation is indeed cooling, which would bolster the case for a rate cut and likely support higher gold prices. The combination of a weaker US dollar, potential US Fed rate cuts, and key economic data releases are set to continue influencing gold prices, making it a crucial period for investors and market watchers.