Is Gold Facing Its 2nd Weekly Loss Due to US Trade Deal Hopes?
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Synopsis
Gold prices are fluctuating amid changing economic forecasts. As the Federal Reserve hints at potential rate stability, traders are closely monitoring US trade deals with China and India. What does this mean for investors? Discover insights on gold's recent weekly performance.
Key Takeaways
- Gold prices declined by Rs 1,649 weekly.
- Current price of 24-carat gold is Rs 1,20,770.
- Gold has increased 3.9% this month.
- Market sentiment is cautious due to Federal Reserve rate hints.
- US-China trade discussions may influence gold's direction.
Mumbai, Nov 1 (NationPress) The cost of 24-carat gold (10 grams) has seen a decline of Rs 1,649 over the week leading up to Saturday. This drop is attributed to diminishing expectations regarding Federal Reserve rate cuts and the optimism surrounding US trade agreements with both India and China.
On Saturday, the price of 10 grams of 24-carat gold decreased by Rs 4, bringing it to Rs 1,20,770, as reported by the India Bullion and Jewellers Association (IBJA).
The weekend price adjustment was also influenced by a decline in international bullion prices, coinciding with a robust dollar.
This month, bullion prices have increased by 3.9 percent, with US gold futures for December delivery remaining steady at $4,016.70 per ounce.
Market sentiment became cautious after the US Federal Reserve reduced its benchmark interest rate by 25 basis points to a range of 3.75 percent to 4 percent, indicating that this might be the final cut until 2025, casting doubt on further near-term easing.
Currently, the market estimates a 74.8 percent likelihood of a 25-basis-point cut from the Fed in December, down from a 91.1 percent probability just a week earlier, based on CME Group's FedWatch tool.
In related news, US President Donald Trump announced an agreement with Chinese President Xi Jinping to reduce tariffs on Chinese goods, contingent on China addressing the illicit fentanyl trade, resuming US soybean imports, and ensuring the flow of rare earth exports.
However, analysts warn that uncertainty persists regarding the stability of this deal. The precious metal has surged approximately 50 percent this year, bolstered by robust central bank purchasing.
“Persistently high risk sentiment continues to provide support for bullion, with key support levels estimated at Rs 1,18,000 and resistance at Rs 1,24,000. Markets are now poised for clarity regarding trade discussions between the US and China and the US and India, which are likely to influence short-term trends,” stated Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities.
For the time being, gold is anticipated to exhibit volatility within these specified ranges,” he added.
Point of View
I believe in presenting an unbiased perspective. The fluctuations in gold prices reflect broader economic conditions and trade relations. It is crucial for investors to stay informed and adapt to these changing dynamics.
NationPress
01/11/2025
Frequently Asked Questions
Why did gold prices drop this week?
Gold prices fell due to diminishing expectations of Federal Reserve rate cuts and optimism surrounding US trade agreements with India and China.
What is the current price of 24-carat gold?
As of Saturday, the price of 10 grams of 24-carat gold is Rs 1,20,770.
How much has gold increased this month?
Gold has gained 3.9 percent so far this month.
What role does the Federal Reserve play in gold prices?
The Federal Reserve's interest rate decisions significantly influence gold prices, as lower rates often lead to higher gold demand.
What are the prospects for gold prices in the near future?
Gold prices are expected to remain volatile, with key support and resistance levels identified, pending clarity on trade discussions.
