New Delhi, Nov 14 (PTI) — In a notable shift, gold and silver futures have retreated in the domestic markets, reflecting a broader trend influenced by subdued global demand and waning expectations for a near-term interest rate cut by the US Federal Reserve. This article delves into the factors contributing to this decline, market reactions, and future implications for investors.
Domestic Market Overview
On the Multi Commodity Exchange (MCX), gold futures for December delivery saw a decline of Rs 345, or 0.27%, settling at Rs 1,26,406 per 10 grams. Similarly, the February 2026 contract dropped by Rs 434, or 0.34%, to Rs 1,27,973 per 10 grams. This downturn marks a significant shift from previous trends, where gold had been buoyed by various economic uncertainties.
Silver futures also experienced a notable decline after a five-day rally. The December contract plunged by Rs 1,190, or 0.73%, to Rs 1,61,280 per kilogram, while the March 2026 contract tumbled by Rs 1,164, or 0.7%, to Rs 1,64,200 per kg. This retreat highlights the volatility in precious metals, often influenced by broader economic indicators.
Global Market Influences
In the international arena, Comex gold futures for December delivery were trading flat at USD 4,195 per ounce. Despite this stability, gold prices had recently surged above USD 4,190 per ounce, positioning them for their best week in a month. This uptick was primarily driven by a softer dollar and uncertainty surrounding a backlog of official data following the US government’s recent reopening.
Jigar Trivedi, Senior Research Analyst at Reliance Securities, noted that the uncertainty surrounding economic data has contributed to fluctuating gold prices. The dollar index, which measures the greenback’s strength against a basket of six currencies, was trading 0.06% higher at 99.21, further complicating the market dynamics.
Economic Data and Its Implications
The reopening of the US government has brought to light concerns regarding the collection of economic data. Kevin Hassett, Director of the White House’s National Economic Council, indicated that certain October figures may “simply never show up,” as various agencies were unable to collect data during the shutdown. This uncertainty has fueled caution regarding the economic outlook, impacting investor sentiment.
Trivedi emphasized that the potential absence of critical economic data could lead to increased volatility in the markets. As investors grapple with these uncertainties, the outlook for gold and silver remains closely tied to broader economic indicators.
Interest Rate Expectations
One of the most significant factors influencing the decline in gold and silver prices is the changing landscape of interest rate expectations. Renisha Chainani, Head of Research at Augmont, pointed out that the probability of a 25 basis point rate cut in December by the Fed has dropped to 50% from over 95% a month earlier. This shift in expectations has led to a recalibration of market sentiment, particularly concerning precious metals.
As inflation concerns persist and economic growth shows signs of slowing, the Fed’s stance on interest rates will be crucial. Chainani noted that while expectations for 2026 remain unchanged, the immediate outlook for rate cuts has become more conservative, impacting the attractiveness of gold and silver as safe-haven assets.
Conclusion
The recent decline in gold and silver futures underscores the intricate interplay between domestic and global economic factors. As investors navigate a landscape marked by uncertainty and shifting expectations, the future of precious metals remains uncertain. With the Fed’s decisions and economic data releases looming large, market participants will need to stay vigilant and adaptable in their strategies.
In summary, while gold and silver have faced headwinds in the short term, ongoing economic developments will play a pivotal role in shaping their trajectories in the coming months. Investors should remain informed and prepared for potential fluctuations as the market responds to evolving economic conditions.
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