Gold Gains Nearly 5% in a Week as Weaker US Dollar Boosts Prices

Gold prices surged nearly 5 per cent on a weekly basis, gaining support from a weaker US dollar and reduced expectations of an imminent Federal Reserve rate hike. On Friday, MCX gold futures (October) were flat while MCX silver futures for September advanced 1.28 per cent. The yellow metal stood at Rs 1,62,440, while the white metal futures stood at Rs 2,46,360 per kg.

The price of 10 grams of 24-carat gold was at Rs 1,58,860 on Friday, up from Rs 1,54,066 seen on Monday at market opening, according to data published by the India Bullion and Jewellers Association (IBJA). Softer US inflation, weaker retail activity and subdued consumer sentiment from the previous week continued to temper expectations of near-term monetary tightening, with markets largely pricing out a September rate increase, analysts said. A US Treasury announcement that it would double its long‑dated bond buybacks, pushed long yields of bonds lower.

"A temporary pullback in Treasury yields following the buyback announcement, along with softness in the US dollar, created a supportive backdrop for gold and silver, while concerns over the U.S. fiscal outlook remained in focus," a market participant said. Gold and silver also benefited from a second consecutive weekly gain in crude oil over lingering tensions in West Asia. WTI crude gained around 5.7 per cent for the week to trade above $86 a barrel, as the expiry of a 60-day US-Iran negotiation window without meaningful progress. Iran continued to insist that the Strait of Hormuz will remain closed until US sanctions and other conditions are addressed, even as separate discussions with Oman over management of the waterway continue. Silver emerged as the stronger performer, climbing to its highest level in two months, supported by robust industrial demand and renewed interest in the debasement trade.

Currency movements also influenced domestic commodity prices. The Indian rupee eased nearly 0.3 per cent during the week as elevated crude prices increased India's import burden. The softer rupee nevertheless provided additional support to MCX gold and silver by raising the domestic cost of imported bullion. Immediate resistance is placed at $4,700–$4,730 zone, for Comex Gold, while support lies at $4,570–$4,600 zone, analysts said. For MCX Gold, immediate resistance is placed at Rs 1,62,500–Rs 1,63,00 zone, while the support lies at Rs 1,58,500–Rs 1,59,000, they added.

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