Experts say gold prices in India are falling due to global factors, particularly US economic data releases that have raised expectations of fewer rate cuts by the Federal Reserve.
At the end of last month Rs. After hitting an all-time high of 81,000, gold prices in India fell significantly to Rs. 75,790 per 10 grams touched a two-month low. Silver also fell to Rs. 90,000, which at the end of October was Rs. 1,00,000 per kg peaked. Experts say gold prices in India are falling due to global factors, particularly US economic data releases that have raised expectations of fewer rate cuts by the Federal Reserve.
The recent gold and silver rates are at their two-month lows as the prices below these were last recorded on September 20, 2024, when the 24-carat yellow metal was priced at Rs. was 75,526.
Why are gold prices falling?
The latest inflation data in the US showed prices rose more than expected in October. The US CPI data, which came in at a higher 2.6 percent than expected 2.4 percent, boosted the strength of the dollar, which hurt gold prices globally. Also, the latest core producer price index (PPI) rose 3.1 percent in October, up from 2.8 percent in the previous month and 3 percent expected.
High inflation makes it difficult for central banks to cut interest rates. Also, higher interest rates increase the opportunity cost of holding bullion, thus weakening its demand and prices.
Jatin Trivedi, Vice-President (Research Analyst), Commodities and Currencies, LKP Securities, said, “Gold’s weakness continued and prices in the MCX dipped below $2,550 and Rs. 73,500 as the dollar climbed above 106.50 and neared a recent US 07 high. CPI data boosted dollar strength. While the Fed continues with rate cuts as inflation nears its 2 percent target, the expected CPI reading raises concerns that further cuts may be on hold. These developments added pressure on gold prices, which reacted negatively to a stronger dollar and a possible change in Fed policy.”
A higher dollar generally makes gold cheaper in terms of dollar purchasing power. However, a weakening of the local currency can make it more expensive for the countries concerned, thus further reducing demand and making it cheaper.
Gold continues to trade lower after US CPI data shows inflation remains sticky above the Fed’s 2 percent, weighted by a higher dollar and Treasuries, said Pranav Mere, vice-president, EBG (commodity and currency research) at JM Financial Services Ltd. Yield increases. target
In the international market, the price of gold decreased to 2,551.8 dollars per ounce and the price of silver decreased to 30,21 dollars per ounce. Global gold prices have fallen more than $220 from a record high last month.
Gold Prices Decline: What’s the Near-Term Outlook?
“Gold’s weakness reflects expectations of more restrictive US monetary policy under Trump in 2025,” said Forex.com market analyst Fawad Razakzada.
According to the CME FedWatch tool, markets are seeing a 59 percent chance of a 25-basis-point rate cut in December, up from 83 percent a day earlier.
On Thursday, US Fed Chairman Jerome Powell said steady economic growth, a strong job market and persistent inflation supported caution in cutting rates faster.
“On technical charts, momentum looks corrective with resistance at 74500/75350, while downside support is at 73400/72580,” said Pranav Mer of JM Financial.
Now, the focus is on US retail sales data due later today, he added.