Spot gold prices rose 0.4% to $2,658.90 per ounce on Monday, finding support after a 4% decline last week. The recovery follows a dip in oil prices, though markets remain cautious ahead of the US Federal Reserve meeting on October 28. Investors are closely watching upcoming US inflation data and Fed policy signals, which could influence global commodity prices and domestic gold rates in India.
Gold prices staged a modest recovery during Monday’s trading, climbing 0.4% to reach $2,658.90 per ounce. This upward movement follows a difficult week for the precious metal, which saw its value drop by 4%—the sharpest weekly decline since June. The current recovery is largely driven by a temporary easing in oil prices, which had spiked recently, heightening concerns about inflation.
The stability of gold prices remains sensitive to global economic factors, particularly in the United States. With the Federal Open Market Committee meeting scheduled for October 28, traders are staying cautious. Gold is a non-yielding asset, meaning it does not pay interest or dividends. Consequently, when the US central bank keeps interest rates high or increases them, gold becomes less attractive to investors compared to interest-bearing assets like bonds. Current data from the CME FedWatch Tool indicates a 75% probability of a rate hike in December, a factor that continues to cap potential upside for the metal.
For Indian investors, tracking these global trends is essential. As India is a major importer of gold, movements in global spot prices directly influence the rates on the Multi Commodity Exchange and impact the landed cost of the metal for local jewellers and consumers. Historically, higher global gold prices can contribute to a wider trade deficit, which may exert pressure on the Indian Rupee and influence domestic policy decisions regarding import duties.
The next major trigger for gold markets is the Personal Consumption Expenditures (PCE) report, due shortly after the Federal Reserve concludes its meeting. As the Federal Reserve’s preferred measure of inflation, this data will be crucial for determining future monetary policy. If the report indicates that inflation remains stubborn, the central bank may feel compelled to maintain higher rates for longer, which would likely keep pressure on gold prices. Investors should monitor central bank commentary closely, as shifting expectations regarding interest rates and inflation will be the primary drivers of market volatility in the coming weeks.