Gold is losing its strength because there isn’t any new positive factor in the market that would propel it higher. Investors are now acting with increased caution, scrutinizing every data point as if they were very careful, and the mood has noticeably turned negative. The fading possibility of another US Federal Reserve rate cut has made the atmosphere even more uncertain. The recent US labor market data has given a lift to the dollar, which has made gold instantly less attractive to global buyers. Normally, when the dollar appreciates, gold takes the hit. Also, the reducing geopolitical tensions, especially the Russia-Ukraine talks, are contributing to gold’s diminishing safe-haven appeal.
Major Reasons Behind The Falling Gold Price Today
- Fading US Fed Rate Cut Expectations
- Prospects of a December Fed rate cut have reduced sharply.
- Strong US job data has dampened expectations.
- Without a rate cut, gold loses its shine as interest-bearing assets become more attractive.
- Strong US Employment Data Pressures Gold
- US Labor Department data showed September nonfarm payrolls rose by 1,19,000, far above the estimate of 50,000.
- The robust job growth pushed the US dollar index above 100, its near six-month high.
- A stronger dollar typically reduces demand for gold.
- Easing Geopolitical Tensions
- US President Donald Trump’s proposal to halt the Russia-Ukraine war is reportedly making “very good progress.”
- With geopolitical risks easing, gold, which thrives during uncertainty, faces downward pressure.