Gold prices fall as strong dollar, fading Fed rate cut hopes weigh on demand

Gold prices slipped on Tuesday as a stronger US dollar and waning expectations of further Fed rate cuts prompted investors to book profits. Analysts cited easing US-China tensions and China’s new tax policy as added pressure on bullion demand

New Delhi: The price of gold futures declined on Tuesday as investors booked profits, tracking gains from a stronger US dollar and lowered expectations for additional Federal Reserve rate cuts this year.

The price of 10 grams of 24-carat gold was Rs 1,19,916 as of 12.30 pm, according to data published by the India Bullion and Jewellers Association (IBJA).

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December gold futures on the Multi Commodity Exchange (MCX) fell by Rs 836, or 0.69 per cent, to Rs 1,20,573 per 10 grams, as the dollar index surged by 0.08 per cent to 99.95.

Analysts noted a strong dollar, reduced US-China trade tensions, and decreased likelihood of another US rate cut as factors diminishing bullion’s attractiveness.

“Gold hovered around $4,000 mark as the dollar remained resilient at over three-month highs. Fed officials continued pressing competing views on the economy, a debate set to intensify ahead of the Fed’s December policy meeting and in the absence of key data, including from the Bureau of Labor Statistics, due to the federal government shutdown,” said Manav Modi, Analyst–Precious Metal – Research, Motilal Oswal Financial Services Ltd.

Meanwhile, China ended a long-standing tax exemption policy for some gold retailers, potentially setting back a gold buying spree in the world’s biggest consumer market.

Central banks globally ramped up gold purchases in Q3 CY25, up 28 per cent on a quarterly basis, according to the World Gold Council’s (WGC) latest data.

“Gold prices began November on a positive note supported by a weaker rupee and Comex gold holding above $4,010. With the ongoing US government shutdown limiting key economic data releases, investors are keen on manufacturing and non-manufacturing PMI readings this week,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.

Analysts noted that developments in US-China and US-India trade talks are expected to keep gold prices highly volatile within a range of Rs 1,18,000 to Rs 1,24,000.