Gold tends to rise in low interest rate environments and during political and economic uncertainty.
The price of gold declined on Monday. A fall in prices was recorded in the domestic futures market on Monday morning. Later it also showed slight recovery. The decline in gold prices was due to weak global signals and rise in dollar. Also, the strong US jobs report fueled expectations of a 50 bps rate cut by the US Fed in November. Due to these reasons, the price of gold on MCX for the contract of December 5 was trading at Rs 76,140 per 10 grams on Monday at 1:29 pm.
Silver futures price also fell
According to the official website of Multi Commodity Exchange, at 1:29 pm on Monday, the futures price of silver fell by 0.55 percent to Rs 92,832 per kg for the contract of December 5. Talking about the latest data of America, according to Reuters, in September, the fastest growth in jobs in America was recorded in six months and the unemployment rate fell to 4.1 percent. This suggests that the US economy is in good shape and the US Fed does not need to move aggressively to cut rates.
Estimated reduction of only 25 bps
According to Livemint, CME’s FedWatch tool believes the market now sees a 95 percent chance the Fed will cut rates by just 25 bps in November. Good macro numbers boosted the US dollar. This has affected gold. Since gold is priced in dollars in international markets, a rise in the US currency makes bullion expensive in other currencies. The attention of investors all over the world is now on the results of the last meeting of the US Fed on October 9.
Gold tends to rise in low interest rate environments and during political and economic uncertainty. At the moment, the evolving situation in the Middle East is a significant positive factor for gold. If the Israel-Iran war escalates, it could deal a serious blow to risky equities and spur purchases of safe haven assets.
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