Gold, silver prices fall over 1% each on weakening of Fed rate cut hopes. Should you buy the dip?
Gold and silver prices fell in early trade on Tuesday, 18 November, amid dwindling expectations for a US interest rate cut as investors await the release of delayed US economic reports this week. The lack of US data over the past six weeks, coupled with hawkish remarks from several Fed officials, has diminished hopes for a rate cut in December.
On the Multi Commodity Exchange (MCX), gold futures for December delivery slipped by Rs 1,462 or 1.2%, trading at Rs 1,21,466 per 10 grams. Silver futures also eased, declining Rs 2,562 or 1.65% to Rs 1,52,750 per kilogram.
On Monday, Fed Vice Chair Philip Jefferson noted that downside risks to employment have risen relative to upside risks to inflation but said that the Fed should proceed “slowly” with further rate reductions. Persistent inflation worries and signs of strength in the US labour market—even after two rate cuts this year—have prompted several Fed officials to remain cautious about further monetary easing.
In the international market, gold prices slipped sharply, falling more than 1% as a firmer dollar and fading expectations of a US rate cut next month weighed on sentiment. Traders also stayed cautious ahead of delayed economic releases due later this week, which could offer fresh signals on the Federal Reserve’s next moves.
Spot gold declined 1.5% to $4,019.12 an ounce at 03:13 p.m. ET (20:13 GMT), while US December gold futures closed 0.5% lower at $4,074.5. Among other precious metals, spot silver slipped 1.2% to $49.94 an ounce, platinum eased nearly 1% to $1,526.45, and palladium was down 0.4% at $1,379.02.
The dollar index edged up, making the metal pricier for buyers using other currencies.Gold—being a non-interest-bearing asset—typically finds favour in low-rate environments and during periods of economic strain. Meanwhile, the reopening of the US government after a record 43-day shutdown eased some investor jitters and restored the normal release of economic indicators.
How should you trade gold?
“Traders will closely watch Thursday’s September jobs report for insights into the health of the US economy, while the release of the Fed’s latest meeting minutes on Wednesday will provide additional rate guidance. Markets currently imply a 43% probability of a 25bps rate cut in December, down from over 60% earlier this month. MCX Gold December may fall to Rs 1,22,000–1,21,700/10g since the prices in the world markets are on a declining trend,” Jigar Trivedi, Senior Research Analyst at Reliance Securities said.
Gold rates in physical markets
Gold price today in Delhi
Standard gold (22 carat) prices in Delhi stand at Rs 92,088/8 grams while pure gold (24 carat) prices stand at Rs 1,00,448/8 grams.
Gold price today in Mumbai
Standard gold (22 carat) prices in Mumbai stand at Rs 91,968/8 grams while pure gold (24 carat) prices stand at Rs 1,00,328/8 grams.
Gold price today in Chennai
Standard gold (22 carat) prices in Chennai stand at Rs 92,312/8 grams while pure gold (24 carat) prices stand at Rs 1,00,704/8 grams.
Gold price today in Hyderabad
Standard gold (22 carat) prices in Hyderabad stand at Rs 91,968/8 grams while pure gold (24 carat) prices stand at Rs 1,00,328/8 grams.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)