Gold Prices Plummet Amid Strong Dollar and Economic Caution

Gold prices experienced a notable decline on Monday as the futures market reacted to mounting pressures stemming from a stronger US dollar and cautious sentiment among investors. This downturn follows an extended period of volatility in global markets, with analysts attributing the drop to concerns about upcoming economic indicators from the United States that may influence the Federal Reserve's monetary policy.

On the Multi Commodity Exchange (MCX), the December futures for gold fell by ₹1,477, which equates to a 1.19% decrease, bringing the price to ₹1,22,714 per 10 grams. This trading session saw a turnover of approximately 9,400 lots. Silver also faced pressure, with December futures declining by ₹1,176, settling at ₹1,52,975 per kilogram.

The dollar index maintained a position above 100, marking its highest level in nearly six months, which limited potential gains for precious metals. On the Comex, December gold dropped 0.95% to $4,076.90 per ounce, while silver prices decreased by 0.74% to $49.54 per ounce. Analysts noted a shift in market expectations, with a nearly 70% probability now priced in for a 25-basis-point rate cut by the Federal Reserve next month, a significant increase from 40% just the previous week.

City-wise gold prices have also reflected this trend. In Delhi, 24K gold is now priced at ₹12,528 per gram, a decrease of ₹71 compared to the previous day's rate. 22K gold in the capital is trading at ₹11,485 per gram, while 18K gold is at ₹9,400 per gram, reflecting similar declines.

In Mumbai, prices mirror those in Delhi, with 24K gold at ₹12,513 per gram, down ₹71, and 22K gold at ₹11,470. Bengaluru's rates are consistent, with 24K gold also priced at ₹12,513 per gram. In Chennai, 24K gold has been recorded at ₹12,567 per gram, witnessing a sharper fall of ₹121 since the previous day.

Other cities such as Kolkata, Hyderabad, Ahmedabad, and Jaipur show similar price trends, with reductions across all categories of gold. For instance, 24K gold in Kolkata stands at ₹12,513 per gram, while in Hyderabad, it is priced the same.

The rupee's performance is also influencing gold prices. A stronger rupee typically results in lower gold prices in India, as it reduces the cost of imports. Today, the rupee traded at ₹89.16 against the US dollar, having appreciated by 50 paise due to selling pressures from banks and importers amidst declining global crude oil prices.

Market analysts are closely monitoring upcoming US economic data releases, including retail sales, producer price index (PPI), jobless claims, and gross domestic product (GDP) figures, as these could significantly impact both gold prices and the Federal Reserve's policy decisions moving forward. As per Jateen Trivedi, Vice President of Research at LKP Securities, 'Gold prices have opened weak, influenced by a stronger rupee and softness in international markets, which has pressured domestic prices.'

Overall, the precious metals market continues to navigate a complex landscape of economic indicators and currency fluctuations, with investors remaining vigilant as they await further data that could influence future trends.