October 3, 2024
New Delhi, India
Gold Prices XAU/USD
Gold prices (XAU/USD) continued to face selling pressure for the second consecutive day on Thursday, reflecting the strength of the US Dollar (USD) and the impact of recent US economic data. Despite this, rising geopolitical tensions in the Middle East are offering some support to the precious metal, tempering its decline.
Key Drivers Behind Gold’s Decline:
- Stronger US Dollar: The US Dollar extended its rally to a three-week high, buoyed by stronger-than-expected economic data. The US ADP Employment Report, released on Wednesday, showed that private sector employers added 143K jobs in September, surpassing expectations of 120K. This reinforced the belief that the US labor market remains resilient, reducing the likelihood of another oversized rate cut by the Federal Reserve in November. As a result, demand for the non-yielding gold weakened, putting downward pressure on its price.
- Reduced Rate Cut Expectations: Investors have scaled back their bets for a 50-basis point rate cut by the Fed at its next meeting, which has further supported the USD’s recovery. Additionally, Fed Chair Jerome Powell’s hawkish stance earlier this week also contributed to reduced rate cut expectations, reinforcing the US Dollar’s strength.
Also Read: USDINR Today: Rupee Softens Amid Rising US Dollar Demand and Geopolitical Tensions
Geopolitical Tensions Offering Support:
However, the downside for gold remains cushioned by escalating geopolitical tensions in the Middle East. On Tuesday, Iran launched over 200 ballistic missiles at Israel, followed by airstrikes by Israel on Beirut, Lebanon. These developments have increased concerns over a potential full-scale war in the region, driving safe-haven demand for gold.
The heightened geopolitical risks have also led to a weaker performance in equity markets, as investors shift away from riskier assets, providing a tailwind for XAU/USD.
Gold in the Indian Market:
In India, gold prices surged by ₹230 on October 3, pushing the price of 24K gold to an all-time high of ₹77,610 per 10 grams in Delhi markets. This increase was supported by both the geopolitical concerns and the start of the festive season, with Navratri being an auspicious period for purchasing jewelry.
What to Watch:
Gold traders should closely monitor upcoming US economic data, including Initial Jobless Claims and the ISM Services PMI on Thursday, as well as the highly anticipated Nonfarm Payrolls (NFP) report on Friday. These reports could influence investor sentiment toward the Federal Reserve’s future rate decisions, affecting the price trajectory of gold.
Experts are also projecting that gold could hit $3,200 an ounce in the coming months, driven by geopolitical concerns and expected rate cuts by the Federal Reserve.
Current Gold Price: XAUUSD
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