Gold and silver futures extended their losing streak for the third consecutive trading session on Wednesday, mirroring weak global trends as investors scaled back expectations for early interest rate cuts from the US Federal Reserve.
Market Performance Details
On the Multi Commodity Exchange (MCX), gold contracts for February delivery witnessed significant pressure, declining by 0.26% to settle at ₹62,335 per 10 grams. The precious metal had previously closed at ₹62,500 in the preceding session, indicating sustained selling pressure throughout the trading day.
Silver futures experienced even steeper declines, with March contracts dropping by 0.62% to ₹71,590 per kilogram. This represented a substantial retreat from Tuesday's closing level of ₹72,035 per kg, highlighting the broader weakness in precious metals.
Global Factors Driving the Decline
The primary catalyst behind the continued slide in precious metals stems from shifting expectations regarding US monetary policy. Recent economic data and statements from Federal Reserve officials have prompted market participants to reconsider the timing of potential interest rate reductions.
Globally, spot gold prices reflected this sentiment, trading 0.2% lower at $2,023.19 per ounce during European trading hours. Analysts noted that the stronger US dollar and elevated bond yields have created headwinds for gold, which typically moves inversely to these indicators.
Market participants are closely monitoring the Federal Reserve's policy trajectory, with many now anticipating that the central bank will maintain higher interest rates for longer than previously expected. This shift in expectations has reduced the appeal of non-yielding assets like gold and silver.
Broader Market Context and Outlook
The three-day decline marks one of the more sustained downturns in precious metals trading this year, though prices remain elevated compared to historical averages. The current correction follows a strong performance in late 2023, when expectations of imminent rate cuts drove significant gains.
Industry experts suggest that the precious metals market is undergoing a necessary correction as traders recalibrate their expectations. The strength of the US economy, particularly robust employment data and persistent inflation metrics, has forced markets to delay their anticipated timeline for monetary easing.
Looking ahead, market participants will closely watch upcoming economic indicators and Federal Reserve communications for further clues about the interest rate path. Any signs of weakening economic data or dovish commentary from Fed officials could potentially reverse the current trend and provide support for gold and silver prices.
For Indian investors, the combination of global price movements and domestic currency fluctuations continues to create a complex trading environment. The resilience of the rupee against the dollar has provided some cushion against steeper declines, though the overall trend remains downward in the near term.
