A strong dollar and high U.S. Treasury yields hampered gold’s price decline to its lowest point since April 2021, as expectations of another significant Fed rate hike reduced the attraction of bullion. To $1,664.46 an ounce, spot gold decreased 1.9 %. At $1,662.30 per ounce, U.S. gold futures experienced a 2.02% decline. Silver prices were down 0.05 % at Rs 56,388 per kg. on the Multi-Commodity Exchange (MCX), and gold contracts were trading 0.11 % lower at Rs 49,260 for 10 grams.
“The price of spot gold fell by almost 2 % on Thursday, reaching its lowest level since April 2020 of 1663.7 dollars per ounce. This was due to sentiments being influenced by high U.S. Treasury yields, a strong dollar, and bets of another significant rate hike by the U.S. Federal Reserve, which reduced the appeal of the yellow metal. Even though gold is seen as a secure investment in times of economic unrest, interest rate increases raise the opportunity cost of possessing non-yielding metal,” said, Prathamesh Mallya, AVP- Research, Angel One.
Gold buyers have been relatively quiet recently due to the recent rise in the U.S. dollar index, rising U.S. Treasury yields, and an increase in U.S. inflation rates. The markets have fully priced in an increase in interest rates of at least 75 basis points, and possibly as much as 100 basis points, following the Fed’s policy meeting next week. We anticipate that gold will trade down toward the Rs 48,870 level; a break of this level might cause the price to drop to the Rs 48,450 level, he added.
Senior Commodities Analyst Tapan Patel at HDFC Securities said, The COMEX spot gold price was trading near $1662 per ounce in the early trade on Friday, which was a disappointing day for gold prices. The hawkish FED and higher rate hike expectations caused the yellow metal to continue to lose money. Gold investment attitudes were negatively impacted by the higher dollar index. We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $1650 and resistance at $1690 per ounce. MCX Gold October support lies at Rs 48900 and resistance at Rs 49800 per 10 grams.