Gold prices fell 6% amid stronger dollar and US inflation worries

Gold prices have seen a significant drop of around 6 per cent since Diwali on concerns over a strong dollar and US inflation data.

The price of 24 carat gold per 10 grams, which was Rs 80,710 on November 1, fell to Rs 75,920 on Saturday. This sharp correction reflects global economic pressures affecting commodity markets.

Highlighting the factors behind the price decline, Jatin Trivedi, VP Research Analyst – Commodity & Currencies, LKP Securities, said, “Gold weakened below USD 2,550 while the dollar rose above 106.50 and neared Rs 73,500 on MCX. And the US CPI data remained close to Rs It came in at a higher 2.6 percent, compared to an expected 2.4 percent, fueling the dollar’s strength.”

The rise in US inflation has fueled speculation about a possible change in the Federal Reserve’s monetary policy. While the Fed is pursuing rate cuts as inflation nears its 2 percent target, the higher-than-expected CPI reading raised concerns that further cuts may be on hold.

“These developments added pressure on gold prices, which reacted negatively to a stronger dollar and a possible shift in Fed policy,” Trivedi noted.

The ongoing correction in gold prices comes after a long rally earlier this year, which saw the precious metal hit record highs. Analysts attribute the recent decline to a combination of strong US economic data and the resulting resilience in the dollar, making gold less attractive as a safe-haven asset.

Looking ahead, market experts suggest that gold’s momentum will depend on upcoming economic indicators and Federal Reserve announcements. Traders and investors are advised to closely monitor global cues as uncertainty prevails in the precious metals market.

Despite the decline, market experts see this as an opportunity for buyers, especially in the ongoing wedding season in India. Dhruv Malhotra, Managing Director, Malhotra Jewels highlighted the cultural and investment appeal of gold in the Indian market.

Malhotra said, “Gold is an integral part of Indian weddings. Regardless of this short-term decline, people continue to buy it as a long-term asset. The current price of 24-carat gold at around Rs 75,000 makes this perfect for buyers. moment to take advantage of the dip.”

Malhotra added that the drop in prices is also a boon for jewellers, as the sudden drop during the high consumption season of weddings has boosted demand.

“For jewellers, demand is always strong, whether prices go up or down. But a drop like this leads to increased buying activity, especially during wedding preparations,” he remarked.