The Gold and Silver prices drop as Dollar strengthens in both Indian and global markets, reflecting reduced investor demand for precious metals. On Tuesday, prices fell sharply due to a stronger U.S. dollar and improving trade relations between the United States and China. These global developments have made investors more confident, reducing their interest in gold and silver as safe-haven assets.
On the Multi Commodity Exchange (MCX), gold futures for December delivery declined by Rs 836, or 0.69%, reaching Rs 1,20,573 per 10 grams. Around 13,332 lots were traded during the session. Similarly, silver futures for December dropped by Rs 1,558, or 1.05%, closing at Rs 1,46,200 per kilogram with 20,939 lots traded.
Meanwhile, the U.S. dollar index, which measures the dollar’s strength against six major currencies, rose by 0.08% to 99.95. A stronger dollar makes gold and silver more expensive for foreign buyers, reducing global demand.
Globally, gold futures for December delivery slipped by USD 19.19, or 0.48%, to USD 3,994.81 per ounce. Silver followed the same trend, falling by 0.62% to USD 47.75 per ounce, marking its third consecutive day of decline.
Market analyst Manav Modi from Motilal Oswal Financial Services said, “Gold hovered around USD 4,000 per ounce as the dollar remained strong at a three-month high. Lower chances of another interest rate cut by the U.S. Federal Reserve and easing U.S.-China tensions weakened bullion demand.”
The U.S. Federal Reserve, the country’s central bank, remains divided on the economic outlook. Its policymakers are preparing for their December meeting, but the absence of key labor data from the Bureau of Labor Statistics—due to a partial government shutdown—has made forecasting difficult.
According to Jigar Trivedi of Reliance Securities, traders are now watching U.S. private payroll data expected this week. This data may give new clues about the Federal Reserve’s interest rate decisions. Lower chances of a rate cut often boost the dollar, while reducing gold’s appeal as an investment.
Last week’s progress in U.S.-China trade talks also affected the market. Both nations agreed to extend their tariff truce, lower export restrictions, and ease trade barriers. This positive development reduced the demand for safe-haven assets like gold and silver, which investors usually prefer during uncertainty.
Analysts predict that in the short term, precious metals will remain under pressure. The combination of a strong dollar, reduced geopolitical risk, and mixed U.S. economic data continues to influence investor sentiment. However, if inflation rises or the global economy slows, gold prices could recover.
Understanding this market movement is important for investors. A rising dollar typically weakens precious metal demand because it increases their cost for buyers using other currencies. Stable trade relations and higher investor confidence further reduce the appeal of gold and silver.
In summary, the Gold and Silver prices drop as Dollar strengthens reflects a global shift in investor behavior. With the dollar firm, trade tensions easing, and rate cuts unlikely soon, precious metals may continue to see limited gains in the near term.
