Gold Prices Fall Nearly 2% Weekly as Fed Rate Hike Concerns Weigh on Bullion

Gold prices dipped almost 2 per cent on a weekly basis amid elevated crude oil prices and rising expectations of a Federal Reserve rate hike, pushing investors away from precious metals. On Friday, MCX gold futures expiring in October declined 0.08 per cent while MCX silver futures (September) shed 0.04 per cent. MCX Gold stood at Rs 1,52,655, while silver stood at Rs 2,34,886 per kg on the commodity exchange.

Moreover, the price of 10 grams of 24-carat gold was at Rs 1,51,938 on Friday down from Rs 1,54,884 seen last Friday, according to data published by the India Bullion and Jewellers Association (IBJA). After escalating US–Iran tensions and attacks on shipping routes raised supply‑risk concerns WTI crude rose above $104 a barrel, gaining 9.6 per cent over the five sessions and nearly 16 per cent over the past month.

The heightened inflation concerns due to crude oil price rally increased expectations of a Federal Reserve rate hike sharply higher. The resulting pressure on precious metals drove gold and silver to their third consecutive weekly declines, although both staged a notable rebound on Friday despite the hotter headline inflation reading. The August CPI report showed headline inflation up 0.4 per cent month-on-month and 3.4 per cent year-on-year, with energy prices again providing a significant push.

US diesel prices also climbed above $6 a gallon for the first time, underscoring the growing inflationary impact of higher energy costs. Analysts said that the sustained rise in crude has increasingly become the key transmission channel linking geopolitical tensions with inflation expectations and Federal Reserve policy. The pressure was evident in Thursday’s producer-price report, which showed annual producer inflation accelerating to 5.4 per cent, above the 5.3 per cent forecast.

The data initially weighed heavily on gold, which fell more than 1 per cent to a one-week low as expectations of a rate hike at the September 15–16 FOMC meeting climbed above 70 per cent, market participants said. Treasury yields also surged, with the 10-year yield touching 4.975 per cent intraday, its highest level since October 2023, while the two-year yield reached a two-year high near 4.65 per cent. The move was further amplified by a disappointing US Treasury buyback operation that purchased less than its authorized maximum. Immediate resistance is placed at $4,500–$4,530 zone for Comex Gold, while support lies at $4,340–$4,370 zone, analysts said. For MCX Gold, immediate resistance is placed at Rs 1,54,000–Rs 1,54,700 zone, while the support lies at Rs 1,50,000–Rs 1,50,700, they added.

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