Gold prices have been on a downward trajectory, with investors reacting to a series of global economic factors. After a period of uncertainty surrounding the U.S. presidential election and a Federal Reserve rate cut, the precious metal has come under pressure, experiencing profit-taking amid a lack of fresh catalysts.
For the week ending November 8, domestic spot gold prices fell nearly 3%, reflecting broader trends in the market. The MCX Gold, which reached an all-time high of ₹79,775 per 10 grams on October 30, closed at ₹77,292 on November 8. This marked a 3.11% drop from the record high, signaling a shift in market sentiment.
International gold prices also experienced a sharp decline, with the precious metal recording its largest weekly drop in over five months. This decline was primarily driven by a stronger U.S. dollar, as investors recalibrated expectations following Donald Trump’s decisive win in the 2024 U.S. presidential election. Market participants are weighing the potential impacts of Trump’s policies on U.S. interest rates, inflation, and global trade. On November 7, the U.S. Federal Reserve implemented a 25 basis point interest rate cut, but there remains uncertainty about the future direction of monetary policy. Trump’s plans, which include more aggressive tariffs, extending tax cuts, and reducing immigration, could contribute to rising inflation and push long-term interest rates higher, challenging the Fed’s current dovish stance.
Moreover, Trump has openly criticized Federal Reserve Chairman Jerome Powell, even suggesting the possibility of dismissing him during his term. Powell, however, has maintained that the outcome of the U.S. election will not influence the Fed’s policy in the near term. He also stated that he would not resign from his position if asked to do so by the incoming president.
What Lies Ahead for Gold Prices?
In light of these developments, experts are cautioning against overly bullish expectations for gold in the near term. The lack of new economic catalysts, combined with a stronger U.S. dollar and a stable inflation outlook, has created a challenging environment for the yellow metal.
Jateen Trivedi, VP Research Analyst at LKP Securities, emphasized that the Fed’s current outlook and inflation targeting at 2% offer little reason to expect gold prices to rise significantly. As a result, the market is in a phase of profit-taking, particularly following Trump’s election victory. Trivedi points to resistance levels for gold in the ₹77,250- ₹77,350 range, with strong support seen at ₹76,500.
Similarly, Rahul Kalantri, VP of Commodities at Mehta Equities, observed that gold has been impacted by a sharp rally in the dollar, which was triggered by Trump’s victory. While the dollar retreated after the Fed’s rate cut, Kalantri believes that gold may continue to face downward pressure in the short term. With major events now behind, Kalantri recommends a “sell on rise” strategy for short-term traders, suggesting that gold prices could face further declines.
In terms of price forecasts, Kalantri expects potential declines to $2,640 and $2,574 in the international markets, while resistance could be found around $2,748. On the domestic front, he predicts that gold prices could fall to ₹76,400. If prices remain below this level, they could drop further to ₹75,400, with resistance expected at ₹78,050.
Strategic Considerations for Traders
For those looking to trade gold in the near term, experts advise caution and careful monitoring of economic and geopolitical developments. The U.S. election results, coupled with the Fed’s rate cut, have already shaped market expectations, and with most major events now concluded, the outlook remains uncertain. A “sell on rise” strategy may benefit short-term traders, with careful attention to gold’s resistance levels and support zones.
Traders are also encouraged to stay alert to geopolitical risks and macroeconomic shifts that could drive gold prices higher. An escalation in global tensions, for instance, could provide the safe-haven appeal gold is known for, pushing prices upward. Until then, gold appears to be in a consolidation phase, with little in the way of new triggers to push prices higher in the near term.
In conclusion, the near-term outlook for gold is marked by uncertainty, as global economic conditions and U.S. policy shifts weigh heavily on the market. Experts suggest a more cautious approach, with a focus on short-term trading opportunities and careful monitoring of external factors that could impact gold prices.
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