Gold prices declined for the second consecutive session on Tuesday, with the MCX October gold contract falling 0.20% to around Rs 1.46 lakh per 10 grams. The yellow metal has lost approximately Rs 8,500 over the past 10 days, nearing a seven-week low amid rising US Treasury yields, a stronger dollar, elevated crude oil prices and expectations of a hawkish Federal Reserve.

Key Highlights

• Gold prices declined Rs 8,500 in 10 days as rising US yields and a stronger dollar weighed on bullion.
• US economic data and Federal Reserve policy expectations are likely to influence gold’s near-term direction and volatility.

The decline follows a nearly 4% fall in global spot gold prices on Monday, when the metal slipped below $4,200 an ounce and touched a seven-week low of around $4,110.

For Indian investors, 24-carat gold was priced at approximately Rs 14,880 per gram, or Rs 1,48,800 per 10 grams. Meanwhile, 22-carat gold stood at Rs 13,640 per gram. Silver prices were at Rs 240 per gram, or Rs 2.4 lakh per kilogram.

Why Are Gold Prices Falling?

Rising US Treasury yields have emerged as a major factor weighing on gold prices. The US 10-year Treasury yield climbed from 4.96% on September 22 to 5.18% on September 24, remaining elevated at 5.17% on September 25.

Higher bond yields increase the opportunity cost of holding gold, which does not generate interest. A stronger US dollar has added further pressure, making the dollar-denominated metal more expensive for holders of other currencies.

According to Kaynat Chainwala, AVP, Commodity Research at Kotak Securities, spot gold was attempting to recover and trading near $4,140 an ounce following Monday’s sharp decline.

She said stalled US-Iran talks had pushed oil prices higher and strengthened expectations that the Federal Reserve could maintain a hawkish stance for longer. Rising US Treasury yields and a firm dollar near two-month highs have also weighed on bullion.

US Economic Data and Fed Policy in Focus

The next major trigger for gold prices will be a series of US economic releases due this week, including the Core Personal Consumption Expenditures (PCE) Price Index, unemployment data and non-farm payrolls.

Chainwala said persistent inflationary pressures and stronger labour-market data could increase expectations of tighter monetary policy, potentially putting further pressure on gold. Conversely, softer economic data or a more patient Federal Reserve could support a recovery in bullion prices.

Jateen Trivedi, VP Research Analyst–Commodity and Currency at LKP Securities, said the Fed’s hawkish tone and rising US bond yields have increased expectations of interest rates remaining higher for longer.

He expects gold to remain volatile, with a trading range of Rs 1,44,000 to Rs 1,49,500.

Gold Price: Key Support and Resistance Levels

Aamir Makda, Commodity and Currency Analyst, Technical Research at Choice Broking, said gold is trading near seven-week lows as markets assess the possibility of higher US interest rates.

According to Makda, the immediate support levels for gold are Rs 1,48,380 and Rs 1,47,950, while resistance is placed at Rs 1,49,500.

He added that a firm dollar and rising bond yields could continue to weigh on prices. Meanwhile, higher oil prices and geopolitical tensions in the Middle East could keep inflation concerns elevated.

Also Read: Gold Loans Overtake Vehicle Loans as Top Securitized Asset Class

What Is the Outlook for Gold Prices?

Gold’s near-term direction will depend on US economic data, crude oil prices and expectations surrounding the Federal Reserve’s interest-rate decisions.

According to the Augmont Daily Report by Dr Renisha Chainani, Chief Research Officer at Augmont Bullion, the CME FedWatch Tool showed a 72.5% probability of a Fed rate hike in October, compared with 57.6% a week earlier. The increase in rate-hike expectations has added to the pressure on gold.

The report noted that gold had broken below the key $4,250 support level, with further downside levels at $4,100 and $4,000. The immediate resistance level was identified at $4,300.

Geopolitical developments will also influence the outlook. Prolonged tensions could keep energy prices and bond yields elevated, while progress towards de-escalation could ease inflation concerns and expectations of tighter monetary policy.

For the domestic market, higher US yields, a stronger dollar and elevated oil prices are likely to remain key factors influencing gold prices in the near term. Investors will be watching upcoming US data and Fed signals for indications of whether the recent decline will continue or give way to a recovery.