Gold recorded its third consecutive weekly loss, driven by shifting economic signals. The precious metal faced headwinds from a strengthening dollar and revised expectations for US monetary policy. Investors recalibrated their positions amid these developments. This trend highlights the sensitivity of gold to global financial cues.
In Mumbai, 24-carat gold fell by Rs 670 per 10 grams over the week. Prices closed at Rs 1,20,100, down from Rs 1,20,770 the previous week. Data from the India Bullion and Jewellers Association confirmed this decline. The dip reflects broader market pressures impacting bullion.
Internationally, gold hovered around $4,000, struggling to gain momentum. Fed Chair Jerome Powell’s hawkish comments weighed heavily on sentiment. Even with a second 25 bps rate cut this year, the outlook remained subdued. These factors combined to limit upward movement.
Market expectations for a December rate cut dropped significantly. Probabilities fell from nearly 90% to around 60%, unsettling gold investors. Concurrently, the dollar index held firm near 100, and USD/INR approached 89. This environment made gold less attractive.
Analysts pointed to data delays due to the prolonged US government shutdown. Reliance on private surveys increased as a result. ISM manufacturing and services PMIs dipped below 50, signaling contraction. Private payrolls, however, rose by 42,000, adding complexity to the Fed’s assessment.
Easing US-China trade tensions also reduced safe-haven demand. Presidents Trump and Xi agreed to tariff reductions in exchange for concessions from Beijing. These included fentanyl controls, renewed soybean purchases, and continued rare-earth exports. The deal lessened immediate economic fears.
China implemented tax changes affecting gold retailers. The removal of a core VAT offset for Shanghai Gold Exchange purchases was a key move. Exemption cuts from 13% to 6% on certain transactions prompted banks to halt new retail accounts. This could dampen physical demand in the world’s largest gold market.
Manav Modi, an analyst at Motilal Oswal, highlighted these adjustments. He noted the potential cooling effect on gold consumption. The changes align with broader regulatory shifts in China’s financial sector. Such measures often influence global gold trends.
The Fed provided roughly $29.4 billion in liquidity support. Coupled with the end of quantitative tightening in December, this underscored ongoing funding stresses. These actions reflect the central bank’s responsive stance to market conditions. They also impact gold’s role as a hedge.
Structural support emerged from the US critical minerals list update. Uranium, copper, and silver were added, signaling strategic importance. This move may boost long-term demand for precious and industrial metals. It underscores shifting resource priorities.
Gold’s performance remains tied to Federal Reserve policies. Each data point and statement influences its trajectory. The metal’s third weekly loss underscores current uncertainties. Investors are watching closely for further cues.
The interplay between dollar strength and rate expectations is key. As hopes for additional cuts wane, gold faces pressure. Market participants must navigate these mixed signals. Clarity from economic indicators will be crucial.
Global events continue to shape gold’s path. From trade deals to tax reforms, multiple factors are at play. The metal’s resilience will be tested in the coming weeks. Adapting to new realities is essential for stakeholders.
Looking ahead, gold markets will monitor Fed communications and economic data. Any shifts in sentiment could trigger rapid price changes. The current environment demands vigilance and strategic planning. Staying informed is more important than ever.