Why Are Gold Prices Dropping Amid Easing Safe Haven Demand?
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Synopsis
Gold prices have recently taken a hit as traders react to diminishing expectations of a US Federal Reserve rate cut. This article explores the factors behind this decline and offers insights into market trends, providing a comprehensive understanding of gold's performance in the current economic landscape.
Key Takeaways
- Gold prices fell significantly due to reduced expectations of a US Federal Reserve rate cut.
- Safety buying has decreased following the US government reopening after a shutdown.
- Market analysts suggest monitoring key support and resistance levels for gold and silver.
- Physical demand from China and Australia continues to support precious metals.
- Economic uncertainty is driving fluctuations in gold prices.
New Delhi, Nov 14 (NationPress) Gold prices experienced a notable decline on Friday, reflecting the subdued trend in global markets as market participants adjusted to diminishing hopes of a near-term rate cut by the US Federal Reserve.
Gold futures on the Multi-Commodity Exchange (MCX) opened in negative territory and remained under pressure throughout the trading session. The December futures contract for gold fell by Rs 1,186, equivalent to a 0.94% decrease, closing at Rs 1,25,573 per 10 grams.
Similarly, MCX Silver December contracts decreased by 1.09% or Rs 1,690, settling at Rs 1,60,780 per kg.
As of mid-day, the price for 10 grams of 24-carat gold stood at Rs 1,25,478, a drop from Rs 1,26,554 the previous day, based on data from the India Bullion and Jewellers Association (IBJA).
Market sentiment surrounding a potential rate cut in December has sharply declined, with traders now estimating only a 50% chance of a 25-basis-point reduction, while forecasts for 2026 remain stable.
Safe-haven buying has lessened as the US government resumed operations following an unprecedented 43-day shutdown that had hindered critical economic data flows.
Earlier in the week, gold prices had risen significantly due to a weaker dollar, heightened safe-haven buying, and increased demand ahead of the peak wedding season.
Analysts noted that precious metals were on track for their strongest weekly performance in a month, driven by uncertainty related to absent U.S. economic data which boosted safe-haven demand.
However, gains were restrained as Federal Reserve officials signaled no immediate necessity for further easing. Robust physical demand from countries such as China and Australia continued to support precious metals throughout the month.
Rahul Kalantri, VP Commodities at Mehta Equities Ltd, indicated that gold has support levels at Rs 1,25,750-1,24,980, while resistance is noted at Rs 1,27,750-1,28,400. For silver, support lies at Rs 1,60,950-1,59,400, and resistance is at Rs 1,63,850-1,64,900.
Point of View
I emphasize that the fluctuations in gold prices reflect broader economic trends and market sentiments. It's crucial to stay informed about these movements, as they can impact both investors and consumers. Our commitment at NationPress is to deliver unbiased and accurate financial reporting.
NationPress
14/11/2025
Frequently Asked Questions
What factors are influencing gold prices currently?
Gold prices are influenced by market expectations regarding US Federal Reserve rate cuts, global economic conditions, and demand fluctuations from major markets like China and Australia.
How have recent events impacted safe-haven buying?
The recent reopening of the US government after a prolonged shutdown has led to decreased safe-haven buying, affecting gold prices.
What support and resistance levels should investors watch for gold?
Investors should monitor gold for support at Rs 1,25,750-1,24,980 and resistance at Rs 1,27,750-1,28,400.
What is the forecast for gold prices in the coming months?
While there is uncertainty due to economic data, strong physical demand could support gold prices, but expectations for significant upward movement may be limited in the near term.
How does silver compare to gold in terms of market performance?
Silver has also seen fluctuations, with current support at Rs 1,60,950-1,59,400 and resistance at Rs 1,63,850-1,64,900, mirroring trends in the gold market.
