Gold prices fell in India on Friday, according to data from India’s Multi Commodity Exchange (MCX).
Gold price stood at 62,442 Indian Rupees (INR) per 10 grams, down INR 85 compared with the INR 62,527 it cost on Thursday.
As for futures contracts, Gold prices increased to INR 62,871 per 10 gms from INR 62,640 per 10 gms.
Prices for Silver futures contracts decreased to INR 77,959 per kg from INR 77,515 per kg.
Major Indian city
Gold Price
Ahmedabad
64,645
Mumbai
64,475
New Delhi
64,570
Chennai
64,620
Kolkata
64,645
Global Market Movers: Comex Gold price resumes its uptrend amid subdued USD demand
Bets that the Federal Reserve will not hike rates again and may start easing its monetary policy by the first half of 2024 continue to lend some support to the non-yielding Gold price.
The CME group’s FedWatch Tool indicates an even possibility that the Fed will cut policy rates as early as March 2024 and a near 80% chance of such a move at the May FOMC meeting.
The bets were reaffirmed by the key inflation data on Thursday, which showed that the Personal Consumption Expenditures (PCE) Price Index remained unchanged in October.
Over the 12 months, the PCE Price Index registered the smallest year-on-year increase since March 2021 and decelerated from 3.4% to 3.0% during the reported month.
Moreover, the gauge that strips out volatile food and energy prices rose by a modest 0.2% in October and saw an annual rise of 3.5%, further pointing to signs of easing inflation.
Another report showed that Jobless Claims rose to 218K last week and 1.93 million people were collecting unemployment benefits the week that ended November 18 – the most in two years.
New York Fed President John Williams said on Thursday that it will be appropriate to maintain a restrictive stance for quite some time to bring inflation back to the 2% target.
San Francisco Fed President Mary Daly noted that interest rates are in a very good place to control inflation, though she is not thinking about cuts and that it was too soon to say if hikes are finished.
Given the recent mixed signals, the market attention will remain glued to Fed Chair Jerome Powell’s speech, which could infuse some volatility and provide a fresh impetus to the XAU/USD.
Traders will also confront the release of the US ISM Manufacturing PMI, which is expected to improve to 47.6 in November, though remains in contraction territory for the 12th straight month.
(An automation tool was used in creating this post.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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