November 12, 2024
New Delhi, India
Gold Prices
Gold (XAU/USD) prices dropped to a one-month low near $2,600 during the European session on Tuesday. The decline is driven by sustained buying interest in the US Dollar (USD), fueled by expectations of expansionary policies from US President-elect Donald Trump.
Key Factors Impacting Gold:
- Strong USD Demand: The USD strengthened on hopes of Trump’s economic policies boosting growth and inflation, limiting the Fed’s room for further rate cuts.
- Elevated Bond Yields: Rising US Treasury yields are making non-yielding assets like gold less attractive, prompting a sell-off in the yellow metal.
- Fed Expectations: Traders anticipate speeches from key Federal Reserve officials, including Fed Chair Jerome Powell, to gauge future interest rate moves.
Market Sentiment:
- Inflation Concerns: Trump’s proposed policies, including corporate tax cuts, could increase inflation, supporting the USD while pressuring gold prices.
- Upcoming Data: Investors are eyeing the US consumer inflation and Producer Price Index (PPI) data this week for additional market direction.
Also Read: Rupee Struggles Near Record Low Amid Persistent Foreign Outflows and Strong US Dollar
Fed’s Rate Cut Odds:
- Fed Rate Cut Chances: According to the CME FedWatch Tool, there’s a 65% probability of a 25-basis-point rate cut at the next Fed meeting, down from higher expectations earlier.
- FOMC Member Comments: Fed officials, including Neel Kashkari, have indicated the need for more evidence of inflation reaching the 2% target before committing to further rate cuts.
Potential Support for Gold:
- Trade War Fears: Concerns over Trump’s potential universal 10% tariff on imports might trigger global trade tensions, providing some support to the safe-haven asset.
With the market awaiting critical economic data and Fed comments, gold’s next directional move will hinge on upcoming cues, particularly related to US inflation and interest rate expectations.
At the time of writingh this article Gold Prices XAUUSD was trading around 2,603.56 down -15.97(-0.61%) at 1:25 PM IST
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