US Dollar Strength and Fed Uncertainty Cause Gold Prices to Dip, Despite Monthly Gain

Gold prices declined on Friday, trading at $4,004 per ounce for spot gold and $4,016.70 for US gold futures, primarily driven by a strengthening US dollar. This dollar strength is attributed to uncertainty over the US Federal Reserve's future interest rate cut path, following hawkish remarks from Fed Chair Jerome Powell. Despite the day's dip, gold has shown resilience, tracking a nearly 3.9% gain for October, bolstered by anticipation of monetary easing and geopolitical tensions. In India, prices for 24-karat gold stood at ₹12,268 per gram, 22-karat at ₹11,245 per gram, and 18-karat at ₹9,201 per gram. Experts suggest gold is in a "minor correction phase" rather than a significant downtrend, with Indian buyers becoming more price-sensitive due to recent market volatility and a dollar index hovering near a three-month high. The prospect of a December rate cut by the Fed is now less certain, impacting gold's yield outlook. SPDR Gold Trust, a major gold-backed ETF, saw a slight increase in its holdings. Silver prices also edged lower in the domestic market. Impact: This news can impact Indian investors by affecting the value of their gold holdings and influencing purchasing decisions. It also affects businesses in the jewelry and precious metals sector, potentially influencing import costs and consumer demand. The indirect impact on the Indian stock market could stem from shifts in investor sentiment and capital allocation away from or towards gold-backed assets or related companies. Impact Rating: 7/10 Definitions: Hawkish remarks: Statements by central bank officials that suggest a preference for tighter monetary policy, such as higher interest rates, to control inflation. Monetary easing: Actions taken by a central bank to reduce interest rates and increase the money supply to stimulate economic activity. Dollar index: A measure of the value of the United States dollar relative to a basket of foreign currencies. Basis-point: A unit of measure equal to one-hundredth of a percentage point (0.01%). Exchange-traded fund (ETF): A type of investment fund that holds assets like stocks, bonds, or commodities, and trades on stock exchanges like individual stocks.