Domestic gold prices have declined by ₹8,500 over the last ten days, currently trading near ₹1.46 lakh per 10 grams. The drop follows rising US Treasury yields and a strengthening dollar as markets prepare for a potential Federal Reserve interest rate hike in October.
Gold prices in the domestic market have witnessed a sharp decline, with the MCX October contract trading near ₹1.46 lakh per 10 grams. This marks a significant retreat for the precious metal, which has lost ₹8,500 in value over the last ten days. The current downward trend reflects a broader global correction, as international spot gold prices have moved below $4,200 an ounce.
Global Drivers of the Price Slide
The primary pressure on gold stems from the performance of the US economy. US 10-year Treasury yields have crossed the 5.15% threshold. When government bond yields rise, they generally offer a more attractive return to investors compared to non-yielding assets like gold. Consequently, many investors are shifting their capital away from bullion. Additionally, the US dollar continues to maintain a firm position near two-month highs, which often creates technical selling pressure, as gold becomes more expensive for buyers using other currencies.
The sentiment is further influenced by the Federal Reserve's monetary policy path. According to the CME FedWatch Tool, the market expectation for an interest rate hike in October has climbed to 72.5%. This indicates that investors are bracing for a higher-for-longer interest rate environment, which traditionally acts as a negative factor for gold prices.
Geopolitical Impact and Market Outlook
While the current environment remains bearish, geopolitical instability in the Middle East continues to complicate the situation. Tensions in the region have kept oil prices elevated, which in turn influences inflation expectations. If oil prices remain high, it may force the Federal Reserve to maintain a hawkish stance to curb inflation, potentially keeping bullion prices volatile in the near term.
Technically, gold has breached several support levels, with some projections pointing toward a potential downside range of $4,000 to $4,100 globally. For domestic investors, market expectations suggest the trading range may remain between ₹1,44,000 and ₹1,49,500 in the coming sessions.
Investors are now looking ahead to key US economic indicators to understand the next market direction. Important data points to track include the Core PCE Price Index, non-farm payroll numbers, and unemployment figures. These reports will be critical in determining whether the Federal Reserve proceeds with the anticipated rate hike, which will likely dictate the next move for gold prices.