Gold and silver prices fell in domestic futures trade on Monday, Sept. 21, as rising US Treasury yields and expectations of further interest rate hikes by the Federal Reserve weighed on precious metals.
On the Multi Commodity Exchange, the October gold futures contract was trading at Rs 1,53,393 per 10 grams, down Rs 988, or 0.64%, from the previous close of Rs 1,54,381, as of 12:07 p.m. The contract moved between a day's low of Rs 1,53,050 and a high of Rs 1,54,059 during the session until noon.
Silver futures for December delivery were trading at Rs 2,39,789 per kg, down Rs 1,814, or 0.75%, from the previous close of Rs 2,41,603. The contract touched a day's low of Rs 2,39,399 and a high of Rs 2,41,122.
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Why Are Gold Prices Falling Today?
The decline in gold comes amid a sharp rise in US Treasury yields and growing expectations of another Federal Reserve rate hike. Reuters reported that the US two-year Treasury yield climbed to around 4.76%, its highest level since mid-2024. Markets were pricing in a 56% probability of another Fed rate hike in October, with a further increase by year-end largely expected.
Higher interest rates and Treasury yields typically weigh on gold because the precious metal does not generate interest income.
Middle East Tensions Add To Rate Concerns
The ongoing Middle East conflict is also influencing the precious metals market through its impact on oil prices and inflation. However, on Monday, oil prices eased as markets assessed signs of recovering supplies from the Gulf, but crude remained elevated amid continuing geopolitical risks.
Thus, higher energy prices are adding to inflation concerns continuously, raising expectations that central banks may keep monetary policy tighter for longer. This is further pushing bond yields higher, which is weighing on gold and silver, as it reduces the attractiveness of non-yielding precious metals.
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