The 4-day rally in gold stalled and prices dropped 1 per cent in the international market on December 2 and the US dollar strengthened. The scope of another rate cut by the US Fed is also dimming. that’s also impacting sentiment. The economic data points and quotes from Federal Reserve officials are other key factors that the market is watching out for.
Spot gold dropped by 0.9 per cent to $2,630.99 per ounce after a 1 per cent fall in the previous trading session. US gold futures aligned with a downward trend touching $2,653.80, a decline of 1.01 per cent.The Dollar Index (DXY), at the same time, moved upward with a 0.5 per cent gain, affirming its best performance in over a week.
Colin Shah, MD, Kama Jewelry said,”This correction in the gold rate is largely influenced by the rally in the US Dollar Index, taking the prices downwards. Along with this, the chances of the Fed going for another rate cut has dimmed, which has given further support to the US Dollar Index, thereby negatively affecting gold prices.”
He further said,”Going ahead, gold prices are likely to stay volatile for the short term and will be majorly guided by the movement in US dollar and Fed’s take on further rate cuts in the upcoming meetings.”
The strengthening of the dollar has made it more expensive for holders of other currencies to hold the yellow metal. Gold reduced by 3 per cent in November, making it the steepest monthly drop since September 2023, attributed to fear of Trump’s tariff plans that could lead to higher interest rates.
Donald Trump’s statement weighs on sentiment
US President Donald Trump on Saturday, warned BRICS nations for 100 per cent tariffs on endorsing an alternative currency to US Dollar.
“Some of the comments of President-elect Donald Trump towards the BRICS countries not to move away from the U.S. dollar are supporting the dollar and moderately weighing on the gold prices today,” said UBS analyst Giovanni Staunovo.
Key U.S. economic events this week include job openings data, ADP employment report and non-farm payrolls. Speeches from Fed officials, including Chair Jerome Powell, will also draw attention.
Indian gold price movement
The gold price today in India has shown a decline of 0.64 per cent with a price reduction of Rs 490, touching 76,670 per 10 grams. The 24 karat gold price yesterday was 77,160 per 10 grams. However, on the contrary, The week’s gold movement aligns, with a gain of 1.47 per cent from 75,560. In the past month, the yellow metal saw a 2.97 per cent decline from 79,020.
Chintan Mehta, CEO, Abans Holdings said, “Gold prices have declined as geopolitical risks in the Middle East eased following a 60-day ceasefire agreement between Israel and Hezbollah. The dollar index has strengthened, driven by PCE index data indicating that while progress in reducing US inflation has slowed, it remains significantly below its peak since the start of the rate cut cycle in September. Additionally, net long positions on the COMEX have fallen in November, as the conclusion of the US elections has reduced political uncertainty.”
(With Reuters Inputs)