- Gold prices fell over 1% to around $4,310 an ounce amid a firmer dollar and Fed rate hike
- Silver declined nearly 3% to about $65 as the dollar reached a two-month high
- Fed raised rates by 25 basis points to 3.75%-4%, with a 53% chance of another hike in October
Gold prices remain under pressure a week after the US Federal Reserve delivered a 25-basis-point rate hike, with a firmer dollar and expectations of further monetary tightening weighing on bullion.
Spot gold fell more than 1% on Wednesday to around $4,310 an ounce, while silver declined nearly 3% towards $65, according to Kotak Securities' Evening Track report. The dollar climbed to a two-month high, making gold more expensive for investors holding other currencies.
The report said gold remains range-bound around $4,300-$4,400 an ounce, with US yields, Federal Reserve expectations and crude oil prices likely to determine its near-term direction.
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The Fed raised rates by 25 basis points last week to 3.75%-4%. Markets are pricing in roughly a 53% probability of another rate hike in October, adding to the pressure on non-yielding assets such as gold.
Can Gold Reclaim Rs 1.55 Lakh On MCX?
The Kotak Securities report does not provide a specific Rs 1.55 lakh target for MCX gold. Instead, it flags the conditions that could help bullion regain upward momentum.
A softer dollar and lower US yields would provide support to gold, while geopolitical uncertainty remains a positive factor. A sustained easing in crude oil prices could also eventually reduce inflationary pressure, potentially offering some relief to precious metals.
At the same time, persistent inflation, firm economic activity and the possibility of further Fed tightening remain key headwinds. Kotak Securities' near-term assessment is cautious, with gold requiring a softer dollar and yields to regain upside momentum.
Crude oil could also influence bullion's next move. Brent was around $99.70 a barrel and WTI near $90 on Wednesday, close to two-week lows, as improving Gulf supply and hopes of diplomacy reduced the immediate supply-risk premium.
Saudi Arabia has resumed its East-West pipeline, allowing around 4 million barrels per day to bypass the Strait of Hormuz. Iraq is also raising exports, while expectations of a possible reopening of the Strait within seven days have improved supply prospects. However, tight refined-product markets and the risk of renewed Middle East disruptions could keep oil-price volatility elevated.
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