Gold prices extended their decline on Friday, tracking weakness in global markets as selling pressure persisted after a strong rally in January. MCX gold futures (GOLD1) were trading around Rs 1,50,552 per 10 grams, down about 1%, reflecting the broader pullback seen in international gold prices.
Globally, spot gold slipped to around $4,750 per ounce, extending a 3.8% fall from the previous session and moving towards its second consecutive weekly decline. The correction comes after gold repeatedly touched record highs in January, driven by heightened geopolitical tensions, concerns around the independence of the Federal Reserve, and strong speculative buying, particularly from China.
A key factor weighing on gold’s safe-haven appeal has been the easing of geopolitical tensions. Markets reacted after Iranian and US officials confirmed that talks would be held in Oman, reducing immediate geopolitical risk and prompting investors to unwind defensive positions accumulated during last month’s rally.
At the same time, weaker US labour market data added another layer of complexity to price movements. US job cuts surged to 108,400 in January, the highest for the month since 2009, while initial jobless claims rose to 231,000 and ADP private payrolls missed expectations. The softer data reinforced expectations that the Federal Reserve could begin cutting interest rates later this year, with markets increasingly pricing in a first rate cut as early as June.
While lower interest rates are typically supportive for non-yielding assets like gold, the immediate impact of profit booking after record highs and easing geopolitical risk has outweighed this positive factor in the near term. As a result, gold has struggled to sustain its earlier gains.
In the domestic market, MCX gold futures mirrored global trends, with prices remaining under pressure despite expectations of future rate cuts. Market participants are now closely watching developments on the geopolitical front and upcoming US economic data for further cues on gold’s near-term direction.
Overall, the decline in gold prices reflects a combination of profit-taking after a sharp rally, easing geopolitical tensions, and shifting global risk sentiment, even as expectations of monetary easing remain supportive over the medium term.
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