On Friday, the last trading day of the week, gold and silver prices witnessed a sharp decline, driven by reduced expectations of an interest rate cut in the United States in December. On the MCX, gold fell by ₹3,351 while silver dropped by ₹6,940.
Market Update:
Gold and silver suffered significant losses on Friday as investors reacted to statements from U.S. Federal Reserve officials indicating a lower likelihood of a rate cut in December. MCX gold futures for 5 December delivery fell to ₹1,21,800 per 10 grams during trading, finally closing at ₹1,23,400, down ₹3,351 or 2.64%. Silver also declined sharply, closing at ₹1,55,530 per kilogram, down ₹6,940 or 4.27%.
International Trends:
Globally, gold prices dropped 3% on Friday due to a broader market sell-off. Spot gold fell 1.9% to $4,092.72 per ounce, after earlier dropping more than 3% during the day. Despite Friday’s fall, gold prices recorded a weekly gain of 2.3%.
Impact of U.S. Policy and Market Sentiment:
December-delivery U.S. gold futures ended 2.4% lower at $4,094.20. Experts attribute the decline to dimmed expectations of a Fed rate cut in December. The recently concluded long U.S. government shutdown left a data gap, leaving policymakers and traders uncertain ahead of next month’s policy meeting.
Investors had hoped new economic data would indicate a slowing economy, prompting the Fed to reduce rates in December. Lower rates typically boost demand for non-interest-bearing assets like gold. However, the Fed’s firm stance on holding rates resulted in a sharp decline in both bullion and stock markets.
Bottom Line:
With the wedding season underway, the sudden drop in precious metals comes as a surprise to buyers and investors alike, highlighting the sensitivity of markets to global economic policy cues.