Gold prices commenced trading in negative territory on Friday, November 21, marking a continuation of gains for a second consecutive session as diminishing expectations for a US interest rate cut persistently weighed on sentiment for these precious metals. The most recent US Fed Minutes revealed a division among Federal Reserve officials regarding the necessity of rate cuts, caught between apprehensions about a softening labor market and ongoing inflationary pressures. Traders currently assign a probability of only 30% for a rate cut next month, a decrease from the previous day’s estimate of 50%. On the MCX, December gold futures declined by Rs 355 or 0.3%, settling at Rs 1,22,372 per 10 grams. Silver futures reflected a similar lackluster performance, experiencing a decline of Rs 2,341 or 1.52%, bringing the price down to Rs 1,51,810 per kilogram.
The minutes from the Federal Reserve meeting indicated a split within the institution, which opted to cut rates last month despite apprehensions that premature easing might jeopardize advancements in 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. Gold prices declined as markets absorbed a stronger-than-expected U.S. September jobs report, which tempered hopes for a December rate cut,” stated Manav Modi. The dollar index maintained its strength against major currencies, remaining above the 100 threshold. The Labor Department’s closely monitored release—delayed as a result of the government shutdown—indicated that nonfarm payrolls in September increased by 119,000, significantly surpassing the anticipated 50,000 rise, thereby bolstering the narrative of a robust labor market.
In the international market, the yellow metal experienced a slight decline following a stronger-than-anticipated U.S. jobs report, which bolstered expectations that the Federal Reserve will refrain from reducing interest rates at its upcoming December meeting. Spot gold experienced a decline of 0.1%, settling at $4,072.87 per ounce at 0242, whereas U.S. gold futures for December delivery saw an increase of 0.3%, reaching $4,071.90. In the realm of precious metals, spot silver experienced a decline of 0.5%, settling at $50.35, while platinum saw a modest increase of 0.4%, reaching $1,521.41. Palladium remained unchanged at $1,377.50. Gold, however, remains poised for its most significant weekly increase in over a month, despite a stronger dollar that continues to render the metal pricier for non-U.S. purchasers.
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.