Gold slips further as dollar strengthens, Fed rate-cut hopes fade

Gold prices fell for a second consecutive session on Tuesday, pressured by a stronger US dollar and fading expectations of another rate cut by the Federal Reserve this year. Investors booked profits as the greenback gained, diminishing gold’s appeal as a safe-haven asset. The price of 10 grams of 24-carat gold stood at Rs 1,19,916 at 12.30 pm. On the Multi Commodity Exchange (MCX), December gold futures were trading lower by Rs 836, or 0.69 per cent, at Rs 1,20,573 per 10 grams. The US dollar index rose 0.08 per cent to 99.95, extending gains from last week.

Dollar strength and global cues weigh on sentiment

A stronger dollar and easing US-China trade tensions have reduced bullion’s attractiveness. A robust greenback generally makes gold more expensive for holders of other currencies, prompting profit-taking among traders.

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“Gold hovered around the $4,000 mark as the dollar remained firm at over three-month highs. Fed officials are voicing differing opinions on the economy, and this debate is likely to intensify before the December policy meeting,” said Manav Modi, Precious Metals Research, Motilal Oswal Financial Services.

The Federal Reserve’s cautious stance, coupled with the absence of key US economic data due to the ongoing government shutdown, has left investors awaiting fresh signals. Foreign media reported that markets are now pricing in limited chances of further rate cuts this year, with focus shifting to economic growth data and upcoming PMI readings.

China ends tax exemption for gold retailers

Adding to the pressure, China ended a long-standing tax exemption policy for select gold retailers - a move seen as an attempt to control domestic consumption in the world’s largest gold market. The decision could slow down gold buying activity, which had surged earlier this year amid economic uncertainty.

Despite the fall in retail demand, central banks continued to stockpile gold. The World Gold Council (WGC) reported that global central bank purchases rose 28 per cent quarter-on-quarter during July–September 2025, highlighting continued institutional demand for the precious metal.

Market outlook remains cautious

“Gold started November on a positive note, supported by a weaker rupee and Comex gold holding above $4,010. However, with limited US data releases, investors are watching manufacturing and services PMI data for direction. Traders expect prices to remain volatile in the near term, fluctuating within a range of Rs 1,18,000 to Rs 1,24,000 per 10 grams. Much will depend on developments in US-China and US-India trade talks, as well as the Federal Reserve’s next policy signals.

Limited upside seen for gold

Unless the US economic outlook weakens or the Fed turns more dovish, gold may remain under pressure through November. The combination of a resilient dollar, easing inflation concerns and subdued retail demand in Asia is likely to cap near-term gains.

For Indian buyers, festive season demand may lend temporary support, but sustained strength in the dollar and global interest rate outlook could limit upside momentum.