Gold prices in India opened lower at Rs 1,20,743 per 10 grams, down Rs 666 or 0.55%, as the dollar index strengthened to three-month highs. Despite this initial dip, prices later saw a slight uptick, reaching Rs 1,21,760 per 10 grams, amid global uncertainty surrounding potential interest rate cuts.

Global Gold Market

The global gold market experienced fluctuations, with spot gold slipping 0.4% to $3,983.87 per ounce internationally. More recently, gold declined 0.8% to $3,969.49 an ounce as the dollar reached multi-month highs and traders reassessed Federal Reserve interest rate prospects. The dollar is experiencing its longest winning streak since July, pressuring commodities priced in the greenback.

Recent Price Movements

Despite recent declines, gold remains up over 50% this year following a rally since late August driven by expectations of Fed easing. Gold had previously surged to an all-time high before retreating due to concerns about the sharp rally. The current price movements reflect the market's sensitivity to monetary policy expectations and economic indicators.

Federal Reserve Outlook

Three Fed policymakers declined to endorse another rate cut in December, with traders now seeing roughly two-thirds probability of easing next month. Fed Chair Jerome Powell previously cautioned against assuming another December cut. Gold traders await comments from Michelle Bowman to gauge December rate move likelihood.

Futures and Silver Prices

• Gold December futures on MCX remained steady near resistance levels of Rs 1.21 lakh.
• Silver December futures traded Rs 1,323 lower at Rs 1,46,435 per kg.
• The dollar index reached 99.97, gaining 0.10%.
• Silver, platinum, and palladium also declined in the broader precious metals market.

Market Analysis and Recommendations

Market analysts expect gold to trade between $3,870-4,140 per troy ounce and silver between $46.50-50.50 per troy ounce. Trading recommendations suggest buying gold around Rs 1,20,650 with a stop loss at Rs 1,19,900, targeting Rs 1,22,000.

City-wise Gold Prices

Physical gold prices varied across major Indian cities:

Prices for 24-carat gold ranged from Rs 97,296 per 8 grams in Chennai to Rs 98,592 in Delhi.

Market Implications

The current gold price movements highlight the intricate relationship between precious metals, monetary policy, and dollar strength. Investors are closely watching for signs of potential interest rate cuts, which could influence gold's appeal as a non-yielding asset. The divergence in city-wise prices also underscores the importance of local factors in determining gold rates across India.

As global economic uncertainties persist, gold continues to attract attention as a potential safe-haven asset. However, the market remains sensitive to central bank policies and economic data releases, which could lead to further price volatility in the near term.

Gold prices experienced a notable decline on Monday, influenced by a stronger U.S. dollar, shifting expectations regarding Federal Reserve rate cuts, and China's decision to remove a tax rebate for certain retailers. The precious metal's retreat comes in the wake of hawkish remarks from Fed Chair Jerome Powell, impacting both spot gold and futures markets. Meanwhile, UBS has identified potential upside risks for gold prices amid market volatility.

Market Movements

Factors Influencing Gold's Decline

1. Stronger U.S. Dollar: The dollar's rise to near three-month highs has put pressure on gold prices, as a stronger dollar typically makes gold more expensive for holders of other currencies.

2. Fed Rate Cut Expectations: Following Chair Powell's comments, market expectations for a rate cut have diminished. Traders now see a 71% chance of a rate cut, down from over 90% previously.

3. Recent Fed Action: The Federal Reserve cut rates by 0.25 percentage points to a range of 3.75%-4.00%, but Powell's hawkish tone has tempered expectations for future cuts.

4. U.S.-China Trade Relations: Easing tensions between the U.S. and China have also contributed to gold's decline. The U.S. President and Chinese President agreed to reduce tariffs, with China committing to address fentanyl trade and resume soybean purchases.

5. China's Tax Rebate Removal: Beijing announced that some retailers can no longer offset value-added tax when selling gold from Shanghai exchanges, leading to a decline in bullion prices.

UBS Forecast and Market Analysis

Despite the current downward trend, UBS has identified upside risks for gold prices. The investment bank projects that the precious metal could reach $4,700 per ounce if political and financial market volatility increases again. This outlook suggests that gold could see significant price appreciation under conditions of heightened market uncertainty.

Technical Analysis

Jateen Trivedi from LKP Securities noted that gold is adjusting to positive US-China trade developments while still pricing in tariff effects and geopolitical risks. Technical analysis shows:

• Resistance: Rs 123,550-Rs 123,950
• Support: Rs 120,172-Rs 119,470
• RSI: 50
• Bollinger Bands and MACD signals: Suggest neutral to bearish momentum

Trivedi recommends a sell-on-rise strategy near Rs 121,300 with a stop loss at Rs 122,500 and targets of Rs 120,000-Rs 119,400.

Gold Prices in India

Gold prices in India reached Rs 121,660 as spot gold fell below $4,000 per ounce. City-wise prices showed:

• Chennai: Rs 121,790 per 10 gm (highest)
• Delhi: Rs 121,230 per 10 gm
• MCX December futures: Rs 122,325

Gold's Performance Context

Despite the recent downturn, gold has shown remarkable performance:

• Year-to-date gain: Over 50%
• Current decline: More than 10% from the record high reached in early October
• Domestic gold prices have corrected 8% from all-time highs of Rs 132,294

Broader Precious Metals Market

The downward trend in gold prices has rippled through the broader precious metals market, with silver, platinum, and palladium all experiencing declines. Silver was trading at Rs 148,860 per kilogram in India.

While gold's recent performance may seem bearish, it's important to consider the metal's significant gains throughout the year and the potential for future appreciation as forecasted by UBS. Investors and market watchers should continue to monitor economic indicators, geopolitical developments, and central bank policies for potential impacts on gold prices in the coming weeks.