Gold and silver prices fell on the MCX in early trade on Thursday, December 4, as investors booked profits amid a stronger dollar and weak spot market demand. MCX February gold contracts dropped 0.13% to ₹1,30,288 per 10 grams, while MCX March silver contracts declined 0.08% to ₹1,82,200 per kg. The dollar index bounced back to 99 after slipping to 98.85 in the previous session. However, gains remained limited due to rising expectations of a US Fed rate cut.
In India, market participants are keeping a close watch on the RBI Monetary Policy Committee (MPC) decision on December 5. Experts are divided, with some expecting a 25-basis-point rate cut, while others predict the central bank will keep rates unchanged for the third consecutive meeting.
US Federal Reserve Rate Cut Could Impact Gold Prices
A key factor that could influence gold prices is a potential rate cut by the US Federal Reserve next week. The US Federal Open Market Committee (FOMC) is scheduled to meet on December 9-10 to review benchmark interest rates. According to Reuters, the CME FedWatch tool currently indicates an 89% probability that the Fed will announce a rate cut on December 10.
“The Fed is likely to cut the federal funds target by another quarter of a per cent at the December 10 decision. Conflicting views among FOMC members will likely prevent the Fed from clearly signalling additional cuts ahead,” said Bill Adams, Chief Economist for Comerica Bank. “But given the negative trend of recent employment data and downside risks to jobs from AI, tariffs, and shaking consumer confidence, the Fed is more likely than not to make an additional cut to the target rate at the following decision on January 31,” further added Bill Adams.
As per the Reuters report, “With investors a bit cautious ahead of the FOMC (Federal Open Market Committee) meeting, the market is largely pricing that the Fed will cut by 25 basis points… What the market needs now is a fresh trigger for (gold) prices to move higher,” said ANZ commodity strategist Soni Kumari.
Kumari highlighted that ongoing profit-taking is normal, but any drop toward $4,000 per ounce would likely attract new buyers because gold remains strongly supported by its fundamentals.
U.S. Jobs Data and Rate Cut Expectations
U.S. private payrolls fell by 32,000 in November, the largest decline in over two and a half years, according to Wednesday’s ADP employment report. However, layoffs remain relatively low, suggesting this may not fully reflect the health of the labor market.
Markets now see an 89% chance of a Fed rate cut next week according to the CME FedWatch tool, and major brokerages also expect easing at the December 9–10 FOMC meeting. Lower interest rates generally support non-yielding assets such as gold.
Focus is now on the U.S. weekly jobless claims data and the delayed September Personal Consumption Expenditures (PCE) Index, the Fed’s preferred measure of inflation, due on Friday.
Silver Falls After Record High
Meanwhile, silver dropped 2.1% to $57.22 after hitting a record high of $58.98 on Wednesday. Silver has gained 101% this year, driven by concerns over market liquidity following outflows to U.S. stocks, its inclusion in the U.S. critical minerals list, and a structural supply deficit.
