Gold slips ₹1,000 to ₹1,23,400/10 gm as cautious Fed boosted US dollar, US-China trade progress

Gold prices (99.9% purity, 24K) in Delhi on Thursday, October 30, declined ₹1,000 to ₹1,23,400 per 10 gram amid a firm dollar after the Federal Reserve hinted at a slower pace of rate cuts and progress in US-China trade talks. On Wednesday, gold rates settled at ₹1,24,400 per 10 gram.

The precious metal of 99.5% purity fell to ₹1,22,800 per 10 gram after closing at ₹1,23,800 per 10 gram on Wednesday, according to the All India Sarafa Association.

The US Federal Reserve on Wednesday, October 29, cut interest rates by a quarter point (25 bps), saying that the job gains have slowed and inflation remains somewhat elevated.

Usually, lower US interest rates would mean a weaker US dollar, which would support gold prices. However, despite a rate cut, the US Fed remained cautious about future rate cuts, saying that hopes for a rate cut in December may be doubtful.

US Fed rate cut

The Federal Open Market Committee (FOMC), led by Federal Reserve Chair Jerome Powell, reduced the borrowing rate to a range of 3.75%-4% by a 10-2 vote.

However, the Fed said that the market expectations for another rate cut in December are doubtful.

"A further reduction in the policy rate at the December meeting is not a foregone conclusion, far from it," Powell said, adding that there were strong different views at the October meeting. "The takeaway from that is that we have not made a decision about December," he said.

This led to a jump in US bond yields and the greenback, resulting in a fall in bullion.

As per analysts, easing tensions between Washington and China further dampened gold's safe-haven appeal, especially after President Donald Trump made remarks about a possible trade deal with President Xi Jinping.

Silver, however, jumped by ₹3,300 to ₹1,55,000 per kg in the national capital on Thursday after ending at ₹1,51,700 per kg on Wednesday.

In the overseas markets, spot gold rose by $1.36% ($53.26) to $3,983.87 per ounce, ending a four-day losing run. Spot silver was trading 1.2% higher at $48.14 per ounce.

"Gold prices traded with mild gains on Thursday. The sentiment is driven after US President Donald Trump hinted at allowing nuclear weapons testing amid other nations pushing for nuclear tests, which kept the risk meter elevated," a PTI report quoted Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, as saying.

The dollar index, which gauges the greenback's strength against a basket of six currencies, jumped 0.12% to 99.34, putting pressure on bullion.

"Traders are awaiting further cues from upcoming Federal Reserve officials' speeches for clarity on the rate outlook and near-term bullion direction," the report quoted experts as saying.