Gold and silver prices experienced a slight decline on Thursday, November 20, as diminishing expectations for a US interest rate cut persisted in undermining sentiment for these precious metals. The most recent US Federal Reserve Minutes revealed a division among officials regarding the necessity for interest rate reductions, caught between apprehensions about a declining labor market and ongoing inflationary pressures. Market participants currently estimate a 30% probability of a rate cut in the upcoming month, a decrease from the 50% likelihood observed just one day prior.
On the MCX, December gold futures experienced a decline of Rs 140 or 0.11%, settling at Rs 1,22,800 per 10 grams. Nevertheless, silver futures experienced an increase, rising by Rs 648 or 0.42% to reach Rs 1,55,755 per kilogram. The minutes from the Federal Reserve meeting indicated a split among members, as the central bank opted to cut rates last month, even amid apprehensions that such a move might jeopardize the advancements made in controlling inflation, which has consistently exceeded the 2% target for more than four years. Governor Powell emphasized a prudent stance, indicating that a December rate cut is not a “foregone conclusion.”
Market uncertainty intensified following the unexpected cancellation of the October employment report by the U.S. Bureau of Labor Statistics. This development sharply reduced the odds of a rate cut in December from 50% to 30%, injecting further volatility into the macroeconomic landscape. In the midst of the ongoing political discourse, President Trump reiterated his criticism of Powell for the perceived sluggishness in rate cuts. Market volatility increased as participants processed concerns regarding the unwinding of Japan’s carry trade. However, this pressure remains unresolved and may persist in affecting short-term fluctuations, according to Manav Modi. In the international market, Gold prices reduced earlier gains following the Federal Reserve’s latest meeting minutes, which moderated market sentiment. Investors remain on the lookout for new economic data to provide clearer signals regarding the U.S. interest rate trajectory.
Spot gold experienced an increase of 0.2%, reaching $4,073.79 per ounce, after having previously surged over 1%. Meanwhile, U.S. December futures concluded the session 0.4% higher at $4,082.80. Among other precious metals, spot silver increased by 0.7% to $51.05, platinum rose by 0.7% to $1,543.12, while palladium decreased by 1.6% to $1,378. Gold, as a non-interest-bearing asset, generally gains appeal in low-rate environments and during times of economic distress. In the interim, the resumption of U.S. government operations following an unprecedented 43-day shutdown alleviated certain investor anxieties and reinstated the regular dissemination of economic indicators.