Gold prices fell for the fifth consecutive session on Thursday (November 14), reaching an eight-week low, as the US dollar strengthened and Treasury yields climbed. Spot gold dropped 0.4%, reaching $2,563.45 per ounce, while US gold futures fell 0.7% to $2,568.30 per ounce.

The drop came as global markets reacted to the rising uncertainty surrounding the Federal Reserve’s pace of interest rate cuts.

In India, the price of 24-carat gold was quoted at ₹74,620 per 10 grams on November 14, while 22-carat gold stood at ₹68,402 per 10 grams.

Factors driving the decline

The US dollar hit a one-year high, making gold more expensive for buyers in other currencies, while rising Treasury yields reached their highest levels since July.

This combination is putting downward pressure on the precious metal.

Financial market analyst Kyle Rodda from Capital.com noted that gold is being “pushed around” by the dollar and yields, creating a “mechanical drop” in the short term.

Investors are closely watching the Federal Reserve’s stance on interest rates.

Although recent inflation data suggests that the Fed might slightly ease rates in the coming month, expectations of higher inflation next year have led to fewer anticipated rate cuts.

The latest data revealed a slight increase in US consumer prices for October, marking a slowdown in progress toward low inflation levels.

Impact of rising yields and dollar strength

Gold is often seen as a hedge against inflation, but higher interest rates make holding non-yielding assets like gold less appealing. The rise in US Treasury yields, now above 4.40%, along with a stronger dollar, has dampened investor demand for gold.

Additionally, cryptocurrencies like Bitcoin, which recently surged to $93,000 per coin, have attracted investor interest, further diverting funds away from precious metals.

Rahul Kalantri, VP of Commodities at Mehta Equities, explained that the rally in the US dollar, combined with investor enthusiasm for cryptocurrencies, is contributing to the decline in gold prices.

As the dollar index nears its highest levels in nearly a year, the demand for gold continues to wane.

Outlook and investment opportunities

Despite the short-term pressure on gold, market experts believe there is still support for the precious metal. Gold has technical support at $2,540–2,520 per ounce, with resistance levels between $2,582 and $2,605 per ounce.

In India, gold has support at ₹74,050–73,880 per 10 grams, with resistance between ₹74,510 and ₹74,780 per 10 grams.

Investors may look for opportunities in the current dip, as gold often rebounds during periods of economic uncertainty. However, with interest rates expected to remain high and inflation in check, the short-term outlook for gold may continue to be subdued.

-With agencies inputs