Gold, silver prices crash up to 2% on easing tariff concerns, fading US Fed rate cut hopes

Rates of gold and silver crashed up to 2 per cent in the domestic futures market on Tuesday morning as fading hopes of a US Fed rate cut in December and easing concerns over US tariffs weighed on demand for safe-haven bullion. MCX Gold December futures were 1.14 per cent down at ₹1,21,521 per 10 grams, while MCX Silver December contracts were 1.75 per cent down at ₹1,52,600 per kg at 9:25 am.

International gold prices fell for a fourth consecutive session on Tuesday, amid a rise in the dollar and weakening prospects for a rate cut next month. The dollar index rose to 99.59, weighing on gold's demand.

Since gold is backed in the US dollar, a stronger greenback makes the yellow metal more expensive in other currencies, affecting its demand.

The US shutdown, which ended after a record 43 days, had delayed the release of key macro data, creating uncertainty about the health of the world's largest economy. Now with the shutdown over, the focus is on key US data releases this week, including the September nonfarm payrolls report on Thursday, as they will shape the expectations about the monetary policy path of the US Federal Reserve.

The central bank officials have been giving mixed signals about Fed policy.

Reuters reported that "Fed Vice Chair Philip Jefferson said on Monday the Fed needed to proceed slowly with further rate cuts, denting expectations for a decrease next month."

"Gold and silver extended losses for the fourth straight session as expectations of a December US rate cut continued to diminish. With no major positive fundamental triggers in recent days, bulls remain hesitant—especially with both metals still trading at historically high levels," said Rahul Kalantri, VP of commodities at Mehta Equities.

"Traders now await a fresh round of US economic data later this week. Meanwhile, a firmer dollar index and slightly higher 10-year treasury yields added pressure to precious metals," said Kalantri.

Gold and silver: Key levels to watch

According to Kalantri, gold has support at $4,000 and $3,965 while resistance is at $4,075 and $4,110. Silver has support at $49.70 and $49.45, while resistance is at $50.75 and $51.10.

In INR, Kalantri sees support for gold at ₹1,22,350 and ₹1,21,780, while resistance is at ₹1,23,750 and ₹1,24,500. Silver has support at ₹1,53,850 and ₹1,52,100, while resistance is at ₹1,56,540 and ₹1,57,280.

According to Jigar Trivedi, Senior Research Analyst at Reliance Securities, MCX gold December may fall to ₹1,22,000 to ₹1,21,700 per 10 grams since the prices in the world markets are on a declining trend.

Aksha Kamboj, Vice President of the India Bullion and Jewellers Association (IBJA) and Executive Chairperson of Aspect Global Ventures, noted that gold prices have dipped marginally, which is indicative of the volatility seen in recent weeks.

Kamboj, however, added that the demand for gold is still adjusting ahead of peak wedding season, even though global cues are staying constant.

"Given that the overall outlook for gold remains stable, investors may want to take advantage of this slight correction to enter the market gradually," said Kamboj.

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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.