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Gold prices slipped to a near 3-week low on Wednesday, beating a retreat as the dollar jumped after Trump was elected US president
US Election 2024: Investors in gold were also turning their attention to the next Federal Reserve policy meeting,
Gold prices slipped to a near three-week low on Wednesday, beating a retreat as the dollar jumped after Republican Donald Trump was elected US president in a remarkable political comeback.
Investors Eye Upcoming Federal Reserve Meeting
Investors in gold were also turning their attention to the next Federal Reserve policy meeting, seeking clues on the pace of interest rate cuts. The prospect of several rate cuts had been underpinning bullion’s stunning rally this year.
Gold Prices and Market Movement
Spot gold was down 1.5% to $2,703.93 per ounce at 1152 GMT. Bullion hit a record high of $2,790.15 last Thursday.
U.S. gold futures were down 1.3% to $2,713.60.
Impact of Dollar Strength on Gold
The dollar hit a four-month high, making bullion more expensive for buyers holding other currencies, as traders bet the prospect of higher tariffs under Trump could keep interest rates higher for longer. [USD/]
Inflation Risks vs. Safe Haven Demand
“Gold will be torn between the risk of rising inflation, potentially slowing the pace of US rate cuts, as tariffs are rolled out and continued demand for safe haven assets,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Gold is considered a hedge against inflation but higher interest rates reduce non-yielding bullion’s appeal.
Gold’s Historical Performance Across Administrations
Gold has done well in recent years under Republican and Democrat administrations – spot gold rose by 54% during Trump’s first term and has gained around 50% so far under current President Joe Biden.
Market Anticipation: Will the Fed Continue with Rate Cuts?
“Looking ahead, the big question for the gold market is how different today’s version of President Trump will be from the one that won the election eight years ago,” said Carsten Menke, an analyst at Julius Baer.
Focus on the Fed’s Policy Announcement
The Fed’s two-day policy meeting ends on Thursday and markets broadly expect the Fed to announce a quarter-point rate cut after a 50-basis-point reduction in September.
“The FOMC will likely still cut on Thursday but the subsequent language will be studied closely for signs of a pause,” Hansen added.
Other Precious Metals in Decline
Commodities from oil to metals and grains slid on Wednesday as the dollar strengthened.
Spot silver fell 2.6% to $31.80 per ounce. Platinum shed 2% to $979.65 and palladium was down 2.9% to $1,044.75. All three metals hit their lowest level in three-weeks.
Gold Rate Today In India
Gold prices fell by Rs 150 to Rs 81,150 per 10 grams in the national capital on Wednesday in line with weak global trends, according to the All India Sarafa Association. Subdued demand from jewellers and retailers also impacted the prices, the association said.
However, silver remained flat at Rs 96,700 per kg.
Gold of 99.5% purity declined by Rs 150 to Rs 80,750 per 10 grams against the previous close of Rs 80,900 per 10 grams on Tuesday.
In the futures trade, gold contracts for December delivery fell by Rs 333 or 0.42% to Rs 78,174 per 10 grams on the Multi Commodity Exchange (MCX).
During the day, the yellow metal plunged Rs 1,007 or 1.3% to hit a low of Rs 77,500 per 10 grams.
Also, silver contracts for December delivery plunged Rs 1,122 or 1.19% to Rs 93,526 per kg. The metal plummeted Rs 3,158 or 3.33% to hit an intra-day low of Rs 91,490 per kg on the MCX.
In the global markets, Comex gold futures traded 0.57% lower or USD 15.60 per ounce to USD 2,734.10 per ounce.
The US Dollar (USD) is gaining due to the market view that Donald Trump’s economic agenda and tariffs will strengthen the American currency. This, in turn, is negative for the precious metal since it is mainly priced and traded in USD.
Comex silver futures declined 1.10% to USD 32.42 per ounce in the Asian market hours.
(With agency inputs)
