Gold Futures Slide on Strong Dollar, US Data Worries

New Delhi, Nov 24 (PTI) Gold prices dropped sharply on Monday in the futures trade tracking weak global trends due to a strong dollar and cautious sentiment ahead of key US macroeconomic data weighed on investor appetite for the precious metal.

On the Multi Commodity Exchange (MCX), gold futures for December delivery plunged by Rs 1,477, or 1.19 per cent to Rs 1,22,714 per 10 grams in a business turnover of 9,400 lots.

Silver futures too witnessed selling pressure, with the white metal for December delivery tanked by Rs 1,176, or 0.76 per cent, to Rs 1,52,975 per kilogram in 10,963 lots.

In the global markets, bullion prices were under pressure as the dollar index, which gauges the greenback's strength against a basket of six currencies, stayed elevated above the 100 mark, its highest in nearly six months, capping upside potential for precious metals.

On Comex, gold futures for December delivery fell by USD 39.10, or 0.95 per cent, to USD 4,076.90 per ounce, while silver for December delivery decreased by 0.74 per cent to USD 49.54 an ounce.

"Gold prices fell to around USD 4,070 per ounce on Monday, as investors awaited more US economic data for clearer signals on the Federal Reserve's policy outlook. Focus will mainly be on Tuesday's retail sales and Producer Price Index (PPI) figures for September, along with weekly jobless claims on Wednesday," Jigar Trivedi, Senior Research Analyst at Reliance Securities, said.

He noted that expectations for a December rate cut have shifted after New York Fed President John Williams signalled support for another rate cut reduction in the near term.

"Markets are now pricing in nearly a 70 per cent probability of a 25 basis points cut next month, compared to around 40 per cent last Thursday following strong jobs data," Trivedi said.

An expert said, "Gold prices have risen nearly 54 per cent so far this year, supported by sustained central bank purchases, safe-haven demand amid geopolitical uncertainty and investor hedging against fiscal uncertainty."

Market participants are also closely tracking the upcoming economic data, including the US GDP and Core Personal Consumption Expenditures (PCE) inflation index later this week.

Analysts said these indicators will be crucial in shaping expectations for the Federal Reserve's monetary policy outlook and could provide direction to bullion prices in the short-term.