Gold prices jumped by over Rs 2,000 per 10 gram on the MCX on Monday, ahead of the Federal Reserve’s policy meeting which begins on Tuesday. While media reports suggested the likelihood of status quo on policy rates, US Treasury Secretary Scott Bessent’s comments on bond markets signalling a rate cut, weakened the dollar index aiding the yellow metal.

The bond market is sending a signal that the Federal Reserve should be cutting interest rates, Bessent said on Thursday, noting that yields on 2-year treasury notes were lower than the central bank's policy rate. "We are seeing that two-year rates are now below fed funds rates, so that's a market signal that they think the Fed should be cutting," Reuters reported quoting Bessent.

On Monday, the MCX June contracts hit the day’s high of Rs 94,708.

Yellow metal on the COMEX was trading at $3,325.30 per troy ounce, gaining by $82 or 2.53%.

Anuj Gupta, Head Commodity & Currency at HDFC Securities said that today’s gains have been on the expectations of a rate cut. He calls it a perfect time to book profits. “Sell gold June Futures at the current market price for a target of Rs 91,700 and a stop loss of Rs 95,100,” Gupta said.

"Gold prices surged sharply as expectations of an interest rate cut by the US Federal Reserve this week fueled strong buying," Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities said, echoing a similar sentiment. In his view, a dovish tone or actual rate cut could push gold higher, while any hawkish surprise might trigger volatility. "Gold is likely to remain volatile within the Rs 93,000 – Rs 96,000 range in the short term," Trivedi said.

Gold has corrected from its lifetime peak of Rs 99,358 and is hovering around Rs 94,576. In the physical bullion market, the yellow metal touched the Rs 1 lakh milestone.

"The bulls dominated the first few weeks of April, while the bears, who tested the $3,200 mark in gold, dominated the final two weeks. Gold prices have corrected almost 8% from their high as the worst of the tariff war is behind us," Renisha Chainani, Head - Research at Augmont said.

In his view, the Federal Reserve's monetary policy choices on May 7 could be the next significant catalyst for gold prices. "Following the May 6-7 policy meeting, it is generally expected that the Fed would maintain the interest rate at a level between 4.25 and 4.5%. Market players will closely examine the policy statement's modifications and listen to Fed Chairman Jerome Powell's remarks during the press conference held after the meeting," he added.

Also read: Commodity Radar: Gold in consolidation phase. Here's how to trade ahead of Fed FOMC

Gold prices in India have jumped by 23.21% so far in 2025. The growth translates into a Rs 17,800 per 10 gram uptick.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)