Gold prices remained nearly flat on Thursday, trading at $4,288.13 per ounce as of 5:50 am on September 24, hovering near a one-week low, according to ET Now reports. The precious metal had declined around 1.5% in the previous trading session, with spot gold falling 1.6% to $4,290.54 an ounce at 11:18 a.m. in New York on Wednesday. Silver also declined sharply by 3.5% to $64.7231 an ounce, with both precious metals trading below their previous levels. Market participants are pricing in around a 70% chance of a Federal Reserve rate hike at the October FOMC meeting, which is supporting the US dollar and pushing bond yields higher, weighing on bullion prices.
Mounting inflation pressures and a strengthening economy appear to be pushing the Fed towards a rate hike on the eve of critical national elections, with traders piling into bets on a second straight policy tightening in late October, as reported by The Economic Times. A closely watched measure of US business activity, S&P Global's flash US Composite PMI Output Index, jumped this month to its highest since July 2021, according to S&P Global. The survey's measure of prices paid by businesses for inputs surged to a nearly four-year high, indicating robust economic momentum. While gold is widely regarded as an inflation hedge, rising interest rates tend to diminish its appeal relative to interest-bearing investments, making the precious metal less attractive to investors.
Iran's President Masoud Pezeshkian said Iran is "ready for dialogue, diplomacy, and negotiations without accepting the language of force", according to ET Now reports. This development comes as the ongoing US-Iran conflict remains another key factor for the trajectory of bullion prices. Iran has offered to reopen the Strait of Hormuz if the US reduces military pressure and lifts its blockade on Iranian ports, as reported by Reuters. Tehran could reopen the strategically important waterway within seven days, provided Washington eases military pressure and removes the blockade on Iranian ports. Iran and the United States remain far apart on how to end their war but diplomacy must continue, a senior Iranian official told Reuters, after Iran's president told the UN General Assembly that Tehran would never surrender to US pressure.
Other precious metals experienced slight fluctuations in their prices during early Asian trade, according to The Economic Times. Spot silver fell 0.6% to $64.08 per ounce, while platinum steadied at $1,749.47 and palladium rose 0.2% to $1,261.95. The Bloomberg Dollar Spot Index was 0.5% higher, contributing to the decline in gold prices, as reported by Bloomberg. Higher rates and a stronger greenback are negative for gold as it pays no interest and is priced in the US currency. US 10-year bond yields are near 52-week highs, increasing the opportunity cost of holding non-yielding assets such as gold.
Market participants will track weekly US jobless claims and New Home Sales data due later in the day, according to ET Now reports. Investors will additionally watch for comments from Federal Reserve officials for further clues on the central bank's interest-rate outlook. The developments around the US-Iran conflict, along with movements in the US dollar, Treasury yields and expectations around the Federal Reserve's interest-rate path, are likely to remain key drivers for gold and silver prices. Gold is likely to remain volatile amid these geopolitical triggers and can be seen between the range of ₹1,51,000– ₹1,54,500, with immediate resistance placed at ₹154,000– ₹154,700, followed by the next resistance zone at ₹156,300– ₹157,000.
