Gold prices surge amid global tensions, falling US treasury yields
Gold prices experienced a rise in the domestic futures market today, defying expectations and reversing a recent downward trend. MCX Gold for December 5 expiry traded 0.21% higher at ₹76,822 per 10gm. The rise comes on the back of positive global cues and a fall in US treasury yields. Globally, gold prices are hovering near record levels amid rising tensions in the Middle East, especially Israel's aggression toward Hezbollah and possible strikes on Iran.
Dollar strength and US economic data influence gold prices
The strength of the dollar index is somewhat restricting these gains in gold prices. Investors are now keenly awaiting a range of US economic data, including retail sales and industrial production figures for September, and weekly jobless claims data. This is expected to provide insights into the US Federal Reserve's future interest rate reduction trajectory.
Gold prices often rise during times of lower interest rates
Gold prices usually rise during lower interest rates, geopolitical tensions, and macroeconomic uncertainty. Traders now see a 92.2% chance that the US Fed will cut rates by 25 basis points in November, according to Reuters's CME FedWatch tool. US import prices also saw their biggest drop in nine months in September, reflecting controlled inflation and bolstering the Fed's plans for further rate cuts.
European Central Bank likely to cut interest rates
The European Central Bank (ECB) is also expected to cut interest rates today as inflation eases and the economy stagnates. The market expects a 25 basis point interest rate cut from the ECB. This potential move by the ECB could further influence global gold prices.
