Gold and silver prices are each falling more than 1% as hopes for Fed rate cuts weaken. Should you buy the dip?

Gold and silver prices fell in early trading on Tuesday, November 18, amid waning expectations for a US interest rate cut as investors await the release of delayed US economic reports this week. The lack of US data over the past six weeks, coupled with hawkish comments from several Fed officials, has dampened hopes for a rate cut in December.On the Multi Commodity Exchange (MCX), gold futures for December delivery fell by Rs 1,462 or 1.2% at Rs 1,21,466 per 10 gram. Silver futures have also declined, declining by Rs 2,562 or 1.65% to Rs 1,52,750 per kilogram.

On Monday, Fed Vice Chairman Philip Jefferson noted that downside risks to employment have increased relative to upside risks to inflation, but said the Fed should proceed “slowly” with further rate cuts. Lingering inflation concerns and signs of strength in the U.S. labor market — even after two rate cuts this year — have prompted several Fed officials to remain cautious about further monetary easing.

In the international market, gold prices fell sharply, falling more than 1%, as a firmer dollar and fading expectations of a U.S. interest rate cut next month weighed on sentiment. Traders also remained cautious ahead of delayed economic releases later this week that could provide new signals about the Federal Reserve’s next steps.

Gold fell 1.5% to $4,019.12 per ounce at 3:13 PM ET (20:13 GMT), while US December gold futures closed 0.5% lower at $4,074.5. Among other precious metals, spot silver fell 1.2% to $49.94 an ounce, platinum fell almost 1% to $1,526.45 and palladium fell 0.4% to $1,379.02.

The dollar index rose, making the metal more expensive for buyers using other currencies. Gold – a non-interest-bearing asset – typically finds favor in a low interest rate environment and during periods of economic stress. Meanwhile, the US government’s reopening after a record 43-day shutdown eased some investor jitters and restored normal publishing of economic indicators.

How should you trade gold?

“Traders will keep a close eye on Thursday’s September jobs report for insights into the health of the US economy, while the release of the Fed’s latest minutes on Wednesday will provide additional interest rate guidance. Markets currently imply a 43% probability of a 25 basis point rate cut in December, compared to over 60% earlier this month. MCX Gold December could fall to Rs 1,22,000-1,21,700/10g as the prices in global markets are on a downward trend,” said Jigar Trivedi, Senior Research Analyst at Reliance Securities.

Gold rates in physical markets

Gold Price Today in Delhi

The standard gold price (22 carat) in Delhi is Rs 92,088/8 gram, while the price of pure gold (24 carat) is Rs 1,00,448/8 gram.

Gold Price Today in Mumbai

The standard gold price (22 carat) in Mumbai is Rs 91,968/8 gram, while the price of pure gold (24 carat) is Rs 1,00,328/8 gram.

Gold Price Today in Chennai

The standard gold price (22 carat) in Chennai is Rs 92,312/8 gram while the price of pure gold (24 carat) is Rs 1,00,704/8 gram.

Gold Price Today in Hyderabad

The standard gold price (22 carat) in Hyderabad is Rs 91,968/8 gram, while the price of pure gold (24 carat) is Rs 1,00,328/8 gram.

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(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times.)