On Tuesday, gold and silver prices commenced trading positively, with increases reaching as high as 1.2%, driven by expectations of a Federal Reserve rate cut in December. Gold December futures prices at MCX exhibited an increase of Rs 1,070, reflecting a rise of 0.86%, currently standing at Rs 1,24,924 per 10 grams. In the latest developments, silver prices for December futures contracts commenced at Rs 1,56,380/kg, reflecting an increase of Rs 1,898 or 1.23%. In the international markets, gold prices exhibited stability on Tuesday following a nearly 2% increase in the prior session, as rising expectations of a U.S. rate cut in December mitigated the effects of a strong dollar. Spot gold declined by 0.2%, trading at $4,132.20 per ounce as of 0107. On Monday, bullion experienced an increase of 1.8% to $4,139.80 — marking its highest level since November 14. Meanwhile, U.S. gold futures for December delivery increased by 0.7%, reaching $4,049.50 per ounce.
The U.S. dollar remained near the six-month highs reached last week, resulting in increased costs for buyers using alternative currencies to purchase the metal. The U.S. Dollar Index was positioned around 100.15, reflecting a decrease of 0.05 points or 0.05%. On Friday, John Williams, President of the New York Federal Reserve, indicated that U.S. interest rates might be reduced “in the near term” without compromising the Fed’s inflation target. He noted that such a move could assist in averting a decline in labor market conditions. Investor expectations for a December rate cut have strengthened, as per reports, which now reflects an 81% probability — an increase from 79% the previous day and 40% a week ago.
Gold, which does not yield interest, generally exhibits stronger performance in contexts characterized by reduced interest rates. Nevertheless, a number of Fed officials have adopted a prudent stance. Dallas Fed President Lorie Logan indicated that rates ought to stay steady for the time being, whereas the leaders of the Chicago and Cleveland Feds warned that further cuts to borrowing costs at this juncture might present risks to the economy.
On the geopolitical front, U.S. and Ukrainian officials engaged in discussions on Monday to reconcile outstanding differences concerning a roadmap to conclude the Ukraine war, subsequent to revisions made to a U.S. proposal that Kyiv and European allies had initially perceived as overly accommodating to Moscow’s demands.