Why are gold rates nosediving today? Explained with four crucial reasons

Gold rate today: After witnessing a strong rally and touching all-time high, the precious metal has finally seen some correction. On Monday, MCX gold prices opened on a lower note, was down 0.77 per cent at ₹1,22,500 per 10 grams, down from the previous close of ₹1,23,451.

Meanwhile, in the international market, spot gold prices slipped 0.7 per cent to $4,082.77 per ounce, while US gold futures for December delivery dropped 1 per cent to $4,095.80.

Gold prices declined as easing tensions between the US and China reduced demand for the safe-haven metal. On the other hand, investors remained cautious ahead of key central bank meetings scheduled later this week for monetary policy signals.

“Gold prices continue to decline as safe-haven demand weakens amid optimism over a potential US–China trade deal and a stronger US dollar. This week is a crucial one for the bullion market, with key events including meetings between US President Donald Trump and Chinese President Xi Jinping, a US Federal Reserve announcement, and several major tech company earnings reports,” said Darshan Desai, CEO - Aspect Bullion & Refinery.

According to market analysts, the recent decline to profit-taking following a sharp rally. As festive season demand eased and investors re-evaluate their risk exposure, gold’s appeal as a safe-haven asset has seen a temporary dip.

“Gold prices continue to drop as investors take profits and global cues become uncertain,” said Aksha Kamboj, Vice President, India Bullion & Jewellers Association (IBJA) and Executive Chairperson, Aspect Global Ventures.

Another key driving factor weighing on gold is the strengthening of the US dollar index. As the dollar appreciates, gold becomes costlier for investors holding other currencies, which in turn dampens demand.

“Demand has stabilized after the festive season, coupled with a stronger US dollar, which has reduced safe-haven buying,” Kamboj added.

Market is also closely tracking the upcoming US Federal Reserve policy announcement on Wednesday, which is likely to put further downward pressure on the bullion.

“If the Federal Reserve signals fewer interest rate cuts than expected in its Wednesday statement, that could put further downward pressure on gold prices,” Darshan Desai of Aspect Bullion & Refinery said.

Market is also expecting a 25 bps rate cut in the upcoming Fed announcement. “Attention is turning to upcoming central bank meetings, with the Federal Reserve widely expected to deliver a 25 basis point rate cut following weak inflation data, while both the ECB and BOJ are anticipated to maintain steady policy stances,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

Gold’s appeal as a safe-haven asset has eased amid improving geopolitical and trade conditions. Optimism over a possible US–India trade deal and renewed talks between the US and China has prompted investors to move back toward riskier assets.

“After an exceptional two-month bull phase, gold and silver prices experienced significant selling pressure last week. The pullback was primarily driven by a stronger dollar index and encouraging developments in U.S. trade negotiations with China and India,” Kalantri said.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.

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