Global spot gold fell to $4,134 per ounce on September 28, a 3% decline driven by a stronger US dollar and rising Treasury yields. In India, gold on the MCX retreated to Rs 1,47,394 per 10 grams. Investors are assessing the impact of a likely Federal Reserve rate hike and geopolitical tensions on the metal's near-term price stability.
Gold prices faced a sharp decline on September 28, falling 3% to reach an eight-week low of $4,134 per ounce. The drop follows a period of strength in the US dollar and a rise in US Treasury yields, which are making non-interest-bearing assets like gold less attractive to global investors.
Global Factors Weighing on Gold
The move comes as market expectations shift regarding US monetary policy. Futures markets are currently pricing in a 68% probability of a 25-basis-point interest rate hike by the Federal Reserve in October. This follows strong US economic data, with flash composite PMI figures reaching 58.4, the highest reading since July 2021. As the 10-year US Treasury yield approaches 5.2% and the US dollar index stays above 101, gold remains under significant pressure.
Geopolitical tensions are also contributing to market volatility. Brent crude prices have jumped past $108 a barrel following the US rejection of a proposal to reopen the Strait of Hormuz. While gold is traditionally seen as a safe-haven asset during conflicts, the immediate reaction has been a sell-off as traders focus on the implications of higher interest rates and a stronger dollar on commodity pricing.
Impact on Indian Markets
The domestic market in India mirrored the global downward trend. Gold on the Multi Commodity Exchange (MCX) fell 2.63% to Rs 1,47,394 per 10 grams. The cost of gold in India continues to be influenced by the 15% import duty introduced in May, which keeps prices higher than international levels. Despite the price drop, jewelry retailers and analysts are monitoring the upcoming festive season, including Navratri and Diwali, to see if physical consumer demand provides a floor for prices.
What Investors Should Monitor Next
The technical outlook remains challenging, with gold having broken through the $4,250 support level. Investors are now focused on upcoming US labor market reports and personal consumption expenditure data. Any evidence of persistent inflation is expected to keep yields high, which could potentially drag spot gold toward its next support zone of $4,100. The interplay between physical festive demand in India and global macroeconomic data will be the primary driver for price movement in the coming weeks.