Amid fading hopes of another interest rate cut by the US Federal Reserve in its upcoming December policy meeting, investor sentiment took a hit, affecting prices of precious yellow metal.
Gold prices plunged by ₹3,900 to ₹1,25,800 per 10 grams in the national capital on Tuesday, tracking a decline in global rates.
The precious metal of 99.5 per cent purity tanked by ₹3,900 to ₹1,25,200 per 10 grams (inclusive of all taxes), according to the All India Sarafa Association.
Silver prices also took a hit, being under pressure as the white metal tumbled by ₹7,800 to ₹1,56,000 per kilogram (inclusive of all taxes).
“Gold and silver experience steep selloffs, as investors wait for hints on the Federal Reserve’s policy course from a succession of US economic data releases this week, amid waning hopes for a US interest rate cut,” said Renisha Chainani, Head - Research at Augmont.
The absence of US data over the last six weeks due to the US government shutdown and hawkish comments made by a number of Fed officials had made another rate cut less likely, she added.
Also Read: Gold prices surge by ₹2,000 to reach ₹1,27,900
In the overseas markets, spot gold extended the losing run for the fourth consecutive session, slipping marginally lower at USD 4,042.32 per ounce. In the last four sessions, the precious metal dropped by USD 152.82, or 3.64 per cent, from USD 4,195.14 an ounce, recorded on November 12.
“Spot gold has extended its decline to the fourth straight day as doubts about the Fed rate cut linger amid hawkish comments from the Federal Reserve (Fed) officials,” observed Praveen Singh, Head of Commodities, Mirae Asset ShareKhan, who added that the rate cut probability in December had fallen to 41 per cent, down sharply from around 63 per cent as seen on November 5.
Spot silver snapped a three-day losing run by gaining 0.57 per cent to USD 50.49 an ounce.
But market participants are expected to keenly watch the Federal Reserve’s most recent meeting minutes, which are set to be released on Wednesday.
Additionally, the September jobs report to be released on Thursday will offer for insights into the strength of the US economy.
“The data release and meeting minutes are expected to provide further clarity on the interest-rate outlook and may influence gold prices in the near term,” noted Saumil Gandhi, Senior Analyst – Commodities at HDFC Securities.
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