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Gold Prices Plunge: How Strong US Jobs Data Sparked Market Sell-Off

Gold prices took a significant hit on Friday as stronger-than-expected US employment data changed market expectations. The robust jobs report reduced the likelihood of near-term Federal Reserve rate cuts, putting pressure on precious metals. MCX gold futures dropped by Rs 1,067 while silver contracts fell over 2 percent. Analysts noted that the strong dollar and shifting rate cut probabilities contributed to the precious metals sell-off.

Key Points: Gold Prices Drop Amid Strong US Jobs Data and Fed Outlook

  • Gold December futures dropped Rs 1,067 to Rs 1,21,697 per 10 grams on MCX
  • Silver contracts fell 2.17% with Rs 3,349 decline to Rs 1,50,802
  • US jobs data showed 119,000 new positions versus 50,000 forecast
  • Strong dollar index above 100 mark contributed to gold price easing
2 min read

Gold prices drop significantly over strong US jobs data

Gold prices fell significantly as robust US employment data reduced expectations for Federal Reserve rate cuts, with MCX gold dropping over Rs 1,000 per 10 grams.

"Nonfarm payrolls in September rising by 119,000, more than double the projected 50,000 increase - Manav Modi, Motilal Oswal Financial Services"

New Delhi, Nov 21

Gold prices saw a massive dip on Friday amid stronger than expected US September jobs data, which faded expectations of a near-term Federal Reserve rate cut.

Gold futures contracts on the Multi Commodity Exchange (MCX) were firmly in red (as of 12.43 pm) as the December futures dropped by Rs 1,067, or 0.87 per cent, to Rs 1,21,697 per 10 grams.

MCX Silver December contracts dipped 2.17 per cent or Rs 3,349 to Rs 1,50,802 per kg.

The price of 10 grams of 24-carat gold was at Rs 1,22,149 down from Rs 1,22,881 on Thursday, according to data published by the India Bullion and Jewellers Association (IBJA).

Analysts said that the dollar index remained strong against its major crosses, sustaining above 100 mark, which acted as a factor in easing of gold prices, apart from adverse jobs data in the US.

"The Labour Department's closely watched release -- postponed due to the government shutdown -- showed nonfarm payrolls in September rising by 119,000, more than double the projected 50,000 increase, reinforcing the narrative of a resilient labour market," said Manav Modi, analyst-precious metal-research, Motilal Oswal Financial Services Ltd.

Market expectations for a December rate have now eased, with traders now pricing in around 30 per cent to 40 per cent probability of a rate cut, as traders weigh remarks from Federal Reserve officials alongside broader economic indicators.

Meanwhile, ongoing developments related to a potential Russia-Ukraine peace agreement are influencing overall market sentiment. Strong physical demand from China and Australia provided support to precious metals through the month.

According to Rahul Kalantri, VP Commodities, Mehta Equities Ltd, gold has support at Rs 1,22,050 to 1,21,480 zone while resistance at Rs 1,23,050 to 1,23,700 zone. Silver has support at Rs 1,53,050 to 1,52,350 zone while resistance at Rs 1,55,140 to 1,55,980 zone.

- IANS

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Reader Comments

R
Rohit P
As someone who invests in gold ETFs, this dip is concerning but temporary. US data always creates volatility. Long-term gold remains a safe haven, especially with geopolitical tensions. Smart investors should see this as a buying opportunity.
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Arjun K
Why does our gold market always dance to American tunes? We're the second largest gold consumer but our prices are dictated by US jobs data and Fed decisions. We need more domestic factors influencing our commodity markets.
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Sarah B
Just checked with my local jeweler in Mumbai - they're still charging high making charges despite the price drop. The actual benefit to consumers is much less than what these headlines suggest. Need more transparency in jewellery pricing.
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Vikram M
Good analysis by the experts. The support and resistance levels mentioned are quite helpful for traders. Gold at 1.21 lakh might be a good entry point for medium-term investment. 🪙
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Nisha Z
Remember when gold was 45k per 10g? Now even after a "massive dip" it's over 1.2 lakh! For common people, gold is becoming unaffordable for traditional purchases and investments. The fundamentals have changed permanently.

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