The Indian rupee held near the record low of 84.4 per USD in November, refraining from extending its plunge from earlier in the month amid the hawkish outlook for the Reserve Bank of India. Domestic inflation surged to 6.2% in October, overshooting the RBI’s target band for the first time in over one year, and delaying expectations on the start of the central bank’s rate cuts. In turn, the currency pair was supported by a soaring dollar as the outlook of expansionary fiscal policy and tariffs in the US ahead of Trump’s commencement drove investors to trim the magnitude of cuts expected by the Fed. Meanwhile, concerns that India’s economy will not be able to sustain its aggressively high growth momentum in upcoming years drove investors to reduce their positions in domestic capital markets. Net outflows aligned with the rebound for G-Sec yields and the decline in the Sensex and the Nifty since reaching their record highs in September.
Gold climbed about 1% to above $2,660 per ounce on Friday, rising for the fourth straight session, supported by a softer US dollar and rising geopolitical tensions. Reports indicated that President Putin warned of a potential nuclear-capable missile strike on Ukraine, while Israel and Hezbollah accused each other of breaching the ceasefire just a day after it took effect. Still, the metal is set to decline around 2% for the week, as markets awaited further US data for additional insights into the Federal Reserve's monetary policy outlook. Earlier this week, core PCE prices in October met expectations, keeping investors anticipating another Fed rate cut in December. Yet, other data pointed to a resilient economy, reinforcing expectations that the Fed will adopt a cautious approach next year. Over the month, gold is set to decline for the first time since June.
