Gold Prices Steady Amid Stronger Dollar and Fed Caution; Trade Détente Offers Mixed Signals

Spot gold prices held steady at $4,000.65 per ounce, with US gold futures seeing a slight increase. The precious metal has seen a nearly 9% decrease from its all-time high reached on October 20. In India, 24-karat gold was priced at ₹12,317 per gram, 22-karat at ₹11,290, and 18-karat at ₹9,238, while silver traded at ₹154 per gram in Delhi.

The current stability is largely attributed to a resilient US dollar, which caps any significant upside for gold. Investor sentiment is also influenced by the Federal Reserve's monetary policy. Following a recent rate cut, Fed Chair Jerome Powell's hawkish tone has led to reduced bets on further interest rate cuts in 2025, with market probability for a December cut decreasing. Gold, which typically benefits from lower interest rates, faces pressure from improving risk appetite and relatively high yields.

Market optimism was buoyed by an agreement between US President Donald Trump and Chinese President Xi Jinping to scale back tariffs, accompanied by China's pledge for increased soybean purchases and rare earth exports. However, China's decision to remove a 6% VAT incentive on gold sales could lead to higher local prices and potentially curb demand in one of the world's largest bullion markets.

Investment demand remains robust, with significant inflows into ETFs and sustained demand for bars and coins. Central banks also increased their gold purchases. In contrast, jewellery demand has fallen for the sixth consecutive quarter, primarily due to high gold prices deterring consumers.

Gold is currently consolidating between $3,920 and $4,060 per ounce, with silver trading between $46 and $49 per ounce. A breakout beyond these ranges could trigger a 3-5% price movement. Traders are now awaiting key US economic data for further direction.

Impact This news has a moderate impact on Indian investors and consumers. The steady gold prices, influenced by global factors, directly affect purchasing decisions for jewellery and investment in India. The outlook suggests range-bound trading in the near term, influenced by global macroeconomic uncertainty. Rating: 7/10

Difficult Terms: Bullion: Refined precious metals, especially gold and silver, in bulk form. Federal Reserve (Fed): The central banking system of the United States. Hawkish Tone: A monetary policy stance suggesting higher interest rates or tighter monetary conditions to control inflation. Rate Cut: A reduction in the central bank's benchmark interest rate. Easing: Actions taken by a central bank to increase the money supply and lower interest rates to stimulate economic growth. CME FedWatch Tool: A tool that monitors market expectations for changes in the Federal Reserve's target for the federal funds rate. Risk Appetite: The degree to which investors are willing to accept risk in their portfolios. Yields: The income return on an investment. Trade Détente: A period of eased tensions and improved relations between countries, particularly in trade. Tariffs: Taxes imposed on imported goods. VAT (Value Added Tax): A consumption tax placed on a product whenever value is added at each stage of the supply chain. ETF (Exchange Traded Fund): A type of security that tracks an index, sector, commodity, or other asset, but which can be purchased or sold on a stock exchange. Central Bank Buying: Purchases of gold by the monetary authorities of countries. Consolidating: A period where a stock or commodity's price moves within a narrow trading range, indicating indecision in the market. ADP Employment: Automatic Data Processing, a private company that releases monthly employment figures. ISM PMI (Purchasing Managers' Index): An economic indicator that measures the economic health of the manufacturing and services sectors. Range-bound: When the price of an asset trades between defined upper and lower levels for a period. Global Macro Uncertainty: Uncertainty arising from broad economic and political factors on a global scale.