Gold prices fell sharply on the Multi Commodity Exchange (MCX) on Wednesday, September 2, extending their recent decline as a stronger US dollar, higher Treasury yields and expectations around Federal Reserve rate hikes weighed on the precious metal. The October gold futures contract was trading at Rs 1,50,150 per 10 grams around 9:44 am, down Rs 1,579, or 1.04%, from the previous close of Rs 1,51,729. It moved between Rs 1,49,665 and Rs 1,50,329 in early trade.
Investors are now watching upcoming US employment data for clues on the Federal Reserve's interest-rate outlook, a key driver of gold prices.
Weekly Gold Performance
MCX gold prices declined for the fifth consecutive trading session on Sept.1, extending the weak trend seen over the past week. The October gold futures contract fell from Rs 1,59,663 on Aug. 26 to Rs 1,51,729 on September 1, marking a decline of Rs 7,934, or nearly 5%, over the five-session period. Gold ended lower on each trading day, with daily declines ranging from 0.4% to 2%. The sharpest fall came on Aug. 26, when prices dropped 2%, while the contract slipped another 1.8% on Sept.1. During the week, MCX gold touched a high of Rs 1,63,202 and a low of Rs 1,49,665, highlighting the heightened volatility in the yellow metal.
Also Read: Gold Approaches Two-Week Low On Rising Yields, Fed Hike Bets
Why Is Gold Price Falling Today?
The decline in domestic gold prices comes amid a broader weakness in international bullion markets. Spot gold fell to its lowest level in more than three weeks, pressured by rising oil prices, higher Treasury yields and a stronger dollar.
Renewed US-Iran military tensions have pushed oil prices higher, reviving concerns over inflation. Higher energy prices could make it harder for the US Federal Reserve to ease monetary policy, while stronger expectations of higher interest rates tend to weigh on gold because the metal does not offer any yield.
According to a Reuters report, traders were pricing in a 67% probability of a Fed rate hike this month, while comments from Fed Governor Michael Barr and Fed Chairman Kevin Warsh have added to expectations that policymakers could raise rates if inflation remains elevated.
A stronger US dollar is also adding pressure. The dollar held near a two-week high on Wednesday, making dollar-denominated gold more expensive for buyers holding other currencies.
Gold Remains Under Technical Pressure
Gold's recent decline has also been accompanied by technical selling. International gold prices remained below their 200-day moving average, a closely watched technical level, after falling for several consecutive sessions.
Markets will now focus on US labour-market indicators, including the ADP employment report due Wednesday and the non-farm payrolls report due Friday. Softer employment data could ease rate-hike expectations and provide some support to gold, while stronger numbers or further hawkish comments from Fed officials could extend the decline.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
