Gold prices have retreated from their recent record highs, experiencing a significant pullback in the last few trading sessions. The price of gold fell from ₹74,367 per ten grams to a one-week low of ₹72,111 on the MCX, representing a notable decline of ₹2,256 over three sessions.
The spot gold price dropped to $2354.95 per ounce in today’s session, marking a three-day slide of $71 or 3%. Following Monday’s peak of $2,450, gold has undergone a correction of 3.9%.
Profit-Booking Drives Downward Movement
This downward trend can be attributed to investors engaging in profit-taking, especially after the release of the Federal Reserve meeting minutes. The minutes revealed a lack of confidence among policymakers regarding imminent interest rate cuts, leading to market fluctuations.
Fed’s Hawkish Tone and Impact on Gold Prices
The Federal Reserve’s minutes from the meeting held on April 30–May 1, 2024, indicated a more hawkish stance, with some policymakers expressing the possibility of tightening policy further if needed. This shift in tone raised concerns about future interest rate cuts, prompting a reaction in the market.
Effect of Central Bank Actions and Economic Indicators
Central banks, including China and India, have slowed their gold imports due to surging prices. This, coupled with higher-than-expected UK inflation and the possibility of reduced rate cuts, has added pressure on gold prices.
Outlook on Oil and Base Metals
The hawkish minutes from the Federal Reserve also impacted oil prices, leading to concerns about demand and rising US stockpiles. Additionally, base metal prices like copper, nickel, and aluminum have declined in today’s trading session.
Disclaimer: We advise investors to consult certified experts before making any investment decisions.
In light of the recent events, it is evident that the gold market is highly sensitive to economic indicators and central bank actions. The hawkish tone of the Federal Reserve has contributed to the downward movement in gold prices, signaling a shift in market sentiment. Additionally, the impact of central banks slowing gold imports highlights the influence of external factors on the precious metal’s value.
Furthermore, the correlation between gold prices and other commodities, such as oil and base metals, underscores the interconnected nature of global financial markets. Investors may need to closely monitor economic indicators and central bank policies to make informed decisions in the volatile gold market.
