Gold Loses 3% Over The Week As Growing Expectations Of A US Fed Rate Hike Weigh On Prices

Gold prices slipped nearly 3% over the week as rising expectations of a U.S. Federal Reserve interest rate hike took their toll on the precious metal. According to India Bullion and Jewellers Association (IBJA) data, the price of 24-carat gold dropped from Rs 1,59,578 per 10 grams to Rs 1,54,884 per 10 grams by Friday. On the MCX exchange, gold futures for October edged up by 0.03% to Rs 1,52,815, while September silver futures fell 0.07% to Rs 2,37,500.

Throughout the week, precious metals experienced significant fluctuations as investors reacted to geopolitical tensions, U.S. labor market data, and shifting expectations regarding the Federal Reserve's interest rate decision. Gold initially benefited from a weaker U.S. dollar and safe-haven demand from investors. However, heightened tensions between the U.S. and Iran led to crude oil prices surging, prompting concerns about inflationary pressures.

The U.S. labor market data further pressured gold prices higher, as inflation expectations intensified the likelihood of a September Federal Reserve rate hike. This, in turn, pushed U.S. Treasury yields and the dollar higher, putting additional pressure on gold as an alternative investment. Bullion prices recovered in the middle of the week after weaker-than-expected U.S. labor data and dovish remarks from the Federal Reserve raised hopes for a more accommodative monetary policy stance.

However, the recovery was short-lived as stronger-than-expected U.S. employment data on Friday again lifted the dollar and Treasury yields.

Analysts note that immediate resistance for Comex gold lies between $4,500 and $4,530, while support is seen between $4,330 and $4,360. For MCX gold, resistance is believed to be between Rs 1,56,500 and Rs 1,57,000, with support ranging from Rs 1,51,500 to Rs 1,52,000.