Why Did Gold Prices Plummet Following Strong US Jobs Data?
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Synopsis
Gold prices suffered a significant reduction due to unexpectedly strong US jobs data, which diminished expectations for a Federal Reserve rate cut. This article delves into the details of the market's reaction, expert opinions, and the broader implications for investors.
Key Takeaways
- Gold prices dropped significantly due to strong US jobs data.
- The December MCX futures fell by Rs 1,067, closing at Rs 1,21,697.
- Silver prices also decreased by 2.17 percent.
- Analysts indicate support and resistance levels for gold and silver.
- Market expectations for Federal Reserve rate cuts have changed.
New Delhi, Nov 21 (NationPress) Gold prices experienced a substantial decline on Friday due to unexpectedly robust US jobs data for September, which diminished prospects for an imminent rate cut by the Federal Reserve.
As of 12:43 PM, gold futures on the Multi Commodity Exchange (MCX) were firmly in negative territory, with the December contract falling by Rs 1,067, or 0.87 percent, settling at Rs 1,21,697 per 10 grams.
MCX Silver December contracts also saw a decline of 2.17 percent, or Rs 3,349, bringing the price to Rs 1,50,802 per kg.
The rate for 10 grams of 24-carat gold dropped to Rs 1,22,149, down from Rs 1,22,881 the previous day, as reported by the India Bullion and Jewellers Association (IBJA).
Analysts noted that the dollar index remained robust against major currencies, sustaining above the 100 mark, contributing to the decline in gold prices, alongside unfavorable jobs data from the US.
According to Manav Modi, precious metals analyst at Motilal Oswal Financial Services Ltd, "The Labour Department's key report, which was delayed due to the government shutdown, indicated a rise in nonfarm payrolls for September by 119,000, significantly surpassing the expected 50,000 increase, thus reinforcing the narrative of a resilient job market."
Market forecasts for a December rate cut have now been tempered, with traders now assigning a 30 to 40 percent probability of a rate reduction, while they assess statements from Federal Reserve officials against broader economic indicators.
In addition, ongoing developments surrounding a potential peace agreement between Russia and Ukraine are shaping overall market sentiment. Strong physical demand from China and Australia has also supported precious metals throughout the month.
Rahul Kalantri, VP Commodities at Mehta Equities Ltd, indicated that gold has support levels at Rs 1,22,050 to 1,21,480 and resistance at Rs 1,23,050 to 1,23,700. For silver, support is identified at Rs 1,53,050 to 1,52,350 and resistance at Rs 1,55,140 to 1,55,980.
Point of View
The recent fluctuations in gold prices highlight the intricate relationship between economic data and market sentiment. As we navigate these changes, it remains crucial to observe how global events, such as the ongoing Russia-Ukraine situation, may further impact investor confidence and commodity prices.
NationPress
22/11/2025
Frequently Asked Questions
What caused the drop in gold prices?
The drop in gold prices was primarily due to stronger than expected US jobs data, which reduced expectations for an imminent Federal Reserve rate cut.
How much did gold prices fall?
Gold prices fell by Rs 1,067, or 0.87 percent, bringing the price down to Rs 1,21,697 per 10 grams.
What is the current market outlook for gold?
Market expectations for a December rate cut have eased, with traders now estimating a 30 to 40 percent probability of a rate cut.
What support levels should investors watch for gold?
Analysts suggest that gold has support at Rs 1,22,050 to 1,21,480 and resistance at Rs 1,23,050 to 1,23,700.
How is the silver market reacting?
MCX Silver contracts also experienced a dip, falling by 2.17 percent, with support and resistance levels similarly outlined by analysts.
