Gold slips for third straight week as dollar firms and Fed cut hopes fade

Gold prices recorded their third consecutive weekly loss as a firm US dollar and waning hopes of another Federal Reserve rate cut dampened investor sentiment. The price of 24-carat gold fell by Rs 670 per 10 grams over the week, closing at Rs 1,20,100 against Rs 1,20,770 last week.

Dollar strength pressures domestic gold

Gold remained under pressure through the week as the dollar index hovered near 100 and the rupee weakened, with the USD/INR rate inching towards 89. A stronger dollar makes gold costlier for holders of other currencies, weighing on demand.

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Global bullion prices stayed close to $4,000 an ounce as investors scaled back bets on further monetary easing. Market expectations for a December rate cut by the US Federal Reserve fell sharply - from nearly 90 per cent to around 60 per cent after Fed Chair Jerome Powell made hawkish remarks about inflation risks.

Foreign media reports said that while the Fed delivered its second 25 basis-point cut of the year, officials have cautioned that policy adjustments will depend on upcoming data. The shift in tone prompted traders to reduce exposure to gold and other non-yielding assets.

Economic data delays deepen uncertainty

The world’s longest US government shutdown has delayed key economic reports, increasing reliance on private surveys. Recent indicators show a mixed picture ISM manufacturing and services activity both slipped below the 50-mark, signalling contraction, while private payrolls rose modestly by 42,000 in October.

The uneven data has made it harder to gauge whether the Fed will maintain a cautious stance or consider another rate move in December. Foreign reports noted that the central bank’s liquidity support of about $29.4 billion and plans to end quantitative tightening by year-end point to underlying stress in funding markets.

Trade truce tempers safe-haven demand

The easing of US–China tensions has also curbed the demand for safe-haven assets like gold. Foreign media said Presidents Donald Trump and Xi Jinping agreed to roll back some tariffs in exchange for Beijing’s steps to curb fentanyl exports, resume soybean imports, and sustain rare-earth supplies to the US.

China, the world’s largest gold consumer, also introduced new tax measures affecting the domestic bullion market. The government removed a key VAT offset for gold retailers buying through the Shanghai Gold Exchange and reduced exemptions from 13 per cent to 6 per cent on certain transactions. Following the changes, major banks reportedly paused new retail gold accounts, signalling a potential slowdown in physical demand.