Precious metals slide: Fed pause and rising unemployment hit gold, silver

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Gold price drop

With the unemployment rate holding steady at 4.2%, investor concerns about economic uncertainty have eased. This directly impacted demand for gold, a traditional safe haven asset, causing its value to drop by over 2% in a single day. Spot gold prices fell significantly, from a high of over $3,400 to $3,300 within 24 hours, marking one of the largest daily drops in recent months.

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International gold price drop

Gold futures markets also saw heavy selling in New York. Analysts attribute the decline to profit-taking after a sustained rally in gold prices over the past few weeks, where it reached record highs. According to Edward Meir, an analyst at Marex, US jobs data suggest that the Federal Reserve may keep interest rates steady, which could further impact gold prices.

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Federal Rate Pause

While US President Donald Trump continues to advocate for interest rate cuts, the Federal Reserve appears hesitant to act quickly. Current expectations suggest there may be only one more rate cut by the end of 2025. Since gold prices are sensitive to interest rate trends, a pause or slower pace of cuts limits gold's upward potential in the short term.

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Impact on the domestic market

Investors now anticipate minimal movement in monetary policy, which could keep gold under pressure. In India, the full impact of this international price drop will be reflected in domestic markets after 10 am on Saturday. Currently, gold prices are stable. In Hyderabad, 22-carat gold is at Rs 91,300 per 10 grams, and 24-carat gold is at Rs 99,600. In recent days, the price of gold had increased by Rs 400 to Rs 1,400.

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Reached a 13-year high

However, this trend may reverse in the current international scenario. Silver has also mirrored gold's volatility, recently hitting a 13-year high of $36.35 per ounce internationally before slightly retreating to $36. The price of silver increased by Rs 4,000 in a single day, reaching Rs 1.18 lakh per kg.