MCX Gold Falls ₹3,500 per 10 Grams on Fed Rate Hike Fears

The metal for October delivery closed lower in each of the last four trading sessions, falling to ₹1,50,891 per 10 grams. This weekly loss was more than double the ₹1,597 gain recorded in the prior week.

The decline reversed September’s gains and turned them into losses, marking a sharp contrast to the strong performance seen in August. Rising bond yields, fueled by elevated crude oil prices, intensified expectations of further interest rate hikes by the US Federal Reserve.

On Thursday, the US 10-year Treasury yield reached its highest level in 19 years, while the 30-year yield touched its highest since 2004. Investors demanded higher returns to hold bonds amid concerns over persistent inflation, increased government spending, and rising corporate borrowing linked to AI infrastructure expansion.

Fed Governor Michael Barr stated that further rate hikes “are likely to be needed” to bring inflation back to the 2% target. Another Fed official, Williams, indicated the central bank has moved away from explicit forward guidance and will now rely on incoming economic data to guide policy decisions.

US inflation has remained stubbornly high, prompting the Federal Reserve to raise short-term interest rates last week—the first increase in three years.

While gold is traditionally viewed as an inflation hedge and a safe-haven asset during geopolitical uncertainty, higher interest rates reduce its appeal as investors shift toward yield-bearing instruments.

Separately, negotiations in New York over a phased de-escalation involving Iran reopening the Strait of Hormuz and the US easing sanctions led to a modest retreat in crude oil prices, though they remained on track for weekly gains.

ICICI Global Markets noted that domestic gold prices will continue to be influenced by global market trends, with the INR exchange rate adding volatility. Physical demand may find support as the festive and wedding season advances.

The brokerage maintained its outlook that local gold prices are likely to trade within the ₹1,40,000 to ₹1,60,000 per 10 grams range for the remainder of 2026.

The article includes a disclaimer that the views expressed are those of individual analysts and not of Mint, and advises investors to consult certified experts before making investment decisions.