Gold is reputed for its stability as a favoured hedge against geopolitical and economic risks. | Photo: Shutterstock
Gold Prices Experience Sharp Decline
Gold prices fell over 1 per cent on Tuesday, marking their biggest drop on a percentage basis in 1-1/2 months. This decline was influenced by recent US employment data, which lowered expectations for a bigger rate cut. At the same time, markets were eagerly anticipating the minutes of the US Federal Reserve’s latest policy meeting for further guidance.
Spot gold plummeted 1.1 per cent to $2,615.50 per ounce by 12:19 p.m. ET (1619 GMT), extending its decline for the fifth session in a row and moving further away from the record peak of $2,685.42 reached on Sept. 26. US gold futures also experienced a loss of 1.2 per cent, dropping to $2,634.60.
Insight:
It is essential to pay close attention to economic data and Federal Reserve announcements as they greatly impact the movement of gold prices. Investors should remain informed of these factors to make prudent decisions in the gold market.
“Last couple of days saw retracement or a pullback due to the change in outlook in regards to interest rates,” said David Meger, director of metals trading at High Ridge Futures. He highlighted the rally in bond yields and the dwindling expectation of substantial rate cuts as contributing factors to the recent decline in gold prices.
The CME FedWatch tool indicated that markets had discounted a 50-basis-point reduction at the Fed’s November meeting following the robust jobs report released last week. The tool now suggests an 87 per cent probability of a 25-bps rate cut.
Upcoming Events and Predictions
Market participants are eagerly awaiting the release of the minutes from the Fed’s latest policy meeting scheduled for Wednesday. Additionally, the US Consumer Price Index data is set to be published on Thursday, followed by the Producer Price Index data on Friday.
Commerzbank noted in a report that the US inflation data expected on Thursday may show a further decline in price pressure. However, this is unlikely to spark renewed speculation of stronger Fed rate cuts. They suggested that geopolitical risks would likely be the primary driver for higher gold prices in the near term.
Continued Interest in Gold ETFs
The World Gold Council reported that globally backed gold exchange-traded funds witnessed a fifth consecutive month of inflows in September. Notably, North America-listed funds increased their holdings during this period, indicating continued interest in gold investments despite the recent price fluctuations.
Spot silver experienced a 4.2 per cent decline, dropping to $30.39 per ounce. Platinum and palladium also saw losses, with platinum falling 1.7 per cent to $955.55 and palladium declining 1.7 per cent to $1,006.61.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First Published: Oct 08 2024 | 11:17 PM IST
