Gold rate today: On account of ease in fear of US Fed rate hike, US dollar (USD) and US bond yield cooled down from record high levels in the week gone by. This helped gold prices rebound from seven-month low. Gold future contract on Multi Commodity Exchange (MCX) for December 2023 expiry ended on Friday at ₹56,898 per 10 gm levels.
In international commodity market, spot gold price finished at $1,832.50 per ounce levels after inching close to its support range of $1,800 to $1,800 per ounce in first half of the week gone by. This rebound in the yellow metal price has triggered a buzz about gold prices bottoming out at around $1,810 levels and it is getting ready for fresh bull trend ahead of the festival season in domestic and international market.
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Reasons that pulled down gold prices
On reasons that dragged gold prices in domestic and international market, Sugandha Sachdeva, Executive Director & Chief Strategist at Acme Investment Advisors said, “Gold prices experienced a challenging week, enduring eight consecutive sessions of decline while reaching a seven-month low before showing signs of recovery towards the end of the week. The decline in the precious metal’s value can be attributed to several factors, primarily the strengthening of the US dollar index and the surging US 10-year bond yields, which reached a 16-year high of 4.884 per cent. Bond yields have been surging amid the pronounced monetary policy tightening measures of the US Fed and the robust US economic data. Rising bond yields create headwinds for gold by increasing the opportunity cost of holding the metal and driving up the value of the dollar. Investors have been shifting their money from non-interest-bearing assets like gold to interest-bearing assets like bonds, as they seek better returns which has reduced the demand for gold, putting downward pressure on its price.”
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Acme Investment Advisors expert went on to add that key indicators such as the upbeat US job openings data for September and the manufacturing Purchasing Managers’ Index (PMI) have raised bets that the US will maintain elevated interest rates for an extended period. This sentiment resulted in a selloff in treasuries and a downward drift in gold prices.
Why US bond yield climbed to record high
On reason that fueled US bond yiled to 16-year high, Mahendra Luniya, Founder and Chairman at Vighnaharta Gold Ltd said, “Gold prices dipped recently due to the US accumulating over $2 trillion in debt in the past year, reaching $32.91 trillion. This prompts investors to favor US government bonds, attracted by their yields.”
US Fed rate hike in focus
“A robust US jobs report for September, released later in the week, heightened expectations of another interest rate hike by the Fed at its November meeting. The US economy added a surprising 336,000 new jobs in September, nearly double the projected 170,000 job additions. However, a dip in hourly earnings for September suggested a slight moderation in wage pressures, leading to some softening of the dollar index and offering some support to the precious metal,” Sugandha added.
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Pointing towards the buzz about ease in US Fed rate hike fear, Anuj Gupta, Head — Commodity & Currency at HDFC Securities said, “Profit booking in US dollar and US bond yhield can be attributed to the buzz about ease in fear of US Fed rate hike. This has happened due to descent in crude oil prices. Both Brent crude oil and WTI crude oil prices hit 5-week low in the week gone by that has eased the inflation pressure on the US central bank. Hence, market is expecting that US Fed may not raise interest rate…
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