Gold and silver prices fell on the Multi Commodity Exchange (MCX) on Friday, September 4, as profit booking took hold amid a stronger US dollar and rising bond yields. MCX gold October futures dropped 0.47% to ₹1,55,041 per 10 grams, while MCX silver December contracts declined 0.48% to ₹2,41,189 per kg around 9:10 AM IST. US gold futures for December delivery also fell by 0.30% to $4,513.76 per troy ounce.
Key Details
The uptick in the dollar index to 99.02 from 98.91 weighed on gold prices. The benchmark 10-year bond yield rose to 4.77%, contributing to the bearish sentiment in the gold market. Traders are closely watching the upcoming US nonfarm payrolls report, which is expected to provide insights into the Federal Reserve's monetary policy direction. According to the CME FedWatch Tool, there is about a 50% chance of a rate hike at the Fed's meeting on September 15-16.
Background
Concerns over inflation, exacerbated by geopolitical tensions in West Asia, are also influencing market dynamics. The US-Iran conflict has led to fears of supply disruptions, which have pushed up crude oil prices. Analysts note that a stronger dollar makes gold more expensive for non-US buyers, which can dampen demand. Ravi Singh, Chief Research Officer at Master Capital Services, indicated that immediate upside targets for MCX gold are ₹1,58,000 and ₹1,60,000, contingent on market conditions.
Related coverage: Gold Prices Drop Over 3% on Fed Rate Hike Speculation, Gold Prices Surge to Three-Month High Amid Treasury Buybacks.
The decline in gold prices could affect investor sentiment in precious metals, particularly as expectations for interest rate hikes persist. Higher yields typically reduce the appeal of non-yielding assets like gold. Investors will watch for the US nonfarm payrolls report due later today for further clues on the Fed's policy direction.
Based on reporting by: livemint.com, moneycontrol.com