Why Did Gold Records Face a 3rd Weekly Loss?
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Synopsis
As gold prices slide for the third consecutive week, driven by a strengthening dollar and fading rate cut hopes, investors are left questioning the future of precious metals. Read on to discover the key factors influencing this trend and what it means for the market.
Key Takeaways
- Gold prices down by Rs 670 this week.
- Influenced by a stronger dollar and fading rate cut hopes.
- International bullion prices remain around $4,000.
- Market expectations for a December cut have decreased.
- US-China trade tensions easing impact gold demand.
Mumbai, Nov 8 (NationPress) The value of 24-carat gold (10 grams) experienced a decline of Rs 670 this week, influenced by a robust dollar and dwindling expectations for another rate cut from the US Federal Reserve.
The final price for 10 grams of 24-carat gold settled at Rs 1,20,100, down from Rs 1,20,770 the previous week, as reported by the India Bullion and Jewellers Association (IBJA).
International bullion prices hovered around $4,000 throughout the week, facing pressure after Fed Chair Jerome Powell made hawkish statements, despite the US Fed implementing a second 25 bps cut this year.
Market anticipations for another rate cut in December dropped from approximately 90 percent to roughly 60 percent, exerting pressure on bullion, while the dollar index remained near 100 and USD/INR approached 89.
Experts noted that the ongoing record-length US government shutdown has postponed official data releases, increasing reliance on private surveys. The ISM manufacturing and services PMIs dipped below 50, signaling contraction, while private payrolls increased by 42,000, complicating the Federal Reserve's outlook.
In the meantime, tensions between the US and China have eased as US President Donald Trump and Chinese President Xi Jinping reached an agreement on tariff reductions in exchange for China's commitments regarding fentanyl, renewed soybean imports, and continued rare-earth exports, which has diminished safe-haven demand.
Manav Modi, Analyst – Precious Metal-Research at Motilal Oswal Financial Services Ltd. mentioned, "China has eliminated a crucial VAT offset for gold retailers purchasing through the Shanghai Gold Exchange and reduced exemptions from 13 percent to 6 percent on certain purchases, leading banks to suspend new retail accounts, potentially cooling physical demand in the world's largest consumer market."
He added that the Fed's liquidity support of about $29.4 billion, along with the upcoming end of QT in December, underscores ongoing funding challenges.
On a positive note, the US has added uranium, copper, and silver to its critical minerals list, which could enhance long-term demand for both precious and industrial metals.
Point of View
It's crucial to recognize the multifaceted factors affecting gold prices. The interplay of international currencies, economic policies, and geopolitical tensions plays a vital role in shaping market dynamics. Staying informed and adaptable is key for investors navigating this volatile landscape.
NationPress
08/11/2025
Frequently Asked Questions
What caused the recent decline in gold prices?
The dip in gold prices is primarily due to a stronger dollar and decreased expectations for further rate cuts by the US Federal Reserve.
How much did gold prices drop this week?
This week, the price of 24-carat gold fell by Rs 670, settling at Rs 1,20,100 for 10 grams.
What impact do US-China trade relations have on gold?
Eased trade tensions have reduced safe-haven demand for gold, contributing to the price decline.
What is the outlook for gold going forward?
Market analysts suggest that the combination of economic indicators and geopolitical factors will continue to influence gold prices in the near future.
Are there any long-term factors affecting gold demand?
Yes, the US's recent addition of critical minerals, including gold, to its list could bolster long-term demand for precious metals.
