Gold prices edged lower on Friday, December 19, snapping a five-session winning streak as investors shifted attention back to riskier assets following softer-than-expected US inflation data. The moderation in price pressures strengthened expectations that the US Federal Reserve may continue with an accommodative policy stance, prompting some profit-booking in the precious metals space.
On the Multi Commodity Exchange (MCX), the February gold futures contract opened marginally lower at ₹1,34,736 per 10 grams, compared with the previous close of ₹1,34,894. Selling pressure intensified as the session progressed, dragging prices down to an intraday low of ₹1,33,728, marking a decline of ₹1,166.
Silver prices also cooled after touching record highs earlier this week. The March silver futures contract on MCX slipped sharply, falling ₹5,759 per kilogram to hit a day’s low of ₹2,01,676.
Market participants noted that while expectations of lower interest rates typically support non-yielding assets like gold, the sharp recent rally encouraged investors to book profits. At the same time, renewed interest in high-growth and AI-linked equities appeared to divert some capital away from safe-haven assets.
US Inflation, Jobs Data Boost Rate-Cut Bets
Expectations of an imminent rate cut by the US Federal Reserve gathered pace after fresh economic data pointed to easing inflation and a weakening labor market. Headline US inflation slowed to 2.7% in November, undershooting market estimates, while core inflation eased to 2.6%, its lowest level since April 2021.
The inflation data provided reassurance after months of persistent price pressures and weighed modestly on the US dollar, reinforcing the view that inflation is on a cooling trajectory. Following the release, the dollar index slipped to around 98.3.
These figures came on the heels of labor market data showing the US unemployment rate jumped to 4.6% in November, the highest reading since September 2021, further supporting the case for monetary easing.
Markets are now increasingly pricing in a rate cut as early as January, after the Federal Reserve has already delivered three consecutive reductions since September, bringing the benchmark federal funds rate to a target range of 3.5%–3.75%.
Geopolitical Tensions Linger
Despite the pullback in precious metals, underlying support remained intact amid ongoing geopolitical uncertainties. The United States’ move to block sanctioned Venezuelan oil shipments following a recent tanker seizure, along with Russia reiterating its firm territorial stance in Ukraine despite intensified US diplomatic efforts, kept global risk sentiment fragile.
Analysts believe that while short-term corrections in gold and silver are possible after the recent surge, a combination of easing monetary policy expectations and persistent geopolitical risks could continue to provide medium-term support to bullion prices.