Gold prices in India have experienced a significant increase of nearly 32% since last Diwali, largely due to geopolitical tensions and other influencing factors. However, the upcoming US election and the Federal Reserve’s policy decision are expected to introduce substantial volatility in the market.

What Happened: The market is currently anticipating a 25-basis point rate cut by the U.S. Federal Reserve. However, the election results on November 5 and the Fed’s decision on November 6 will play a crucial role in determining the future trajectory of gold prices.

The international gold market saw profit booking on Friday, influenced by a stronger U.S. dollar and rising treasury yields.

Despite these factors, weak nonfarm payroll data has increased expectations of further monetary easing by the Fed, which has limited gold’s losses.

According to Reuters, nonfarm payrolls increased by only 12,000 jobs last month, marking the smallest rise since December 2020.

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Experts like Alex Kuptsikevich from FxPro note that gold is in its fourth consecutive week of gains, with futures prices exceeding $2800 per troy ounce.

Why It Matters: The recent surge in gold prices can be attributed to several factors, including geopolitical tensions and speculative trading.

In April, gold and silver prices continued their upward trend, driven by ongoing geopolitical tensions in the Middle East. Spot gold rose by 0.42% to $2,339.60 per ounce, with US gold futures also climbing by 0.53%.

Gold stocks such as Titan, Kalyan Jewellers, and others experienced a boost after Finance Minister Nirmala Sitharaman announced a reduction in customs duty on precious metals. The basic customs duty on gold and silver was cut to 6%, providing further momentum to gold stocks.

These developments underscore the complex interplay of global events and policy decisions that continue to influence gold prices, making the upcoming US election and Fed policy decision crucial for investors and market participants.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo courtesy: Michael Sutton via Flickr