Gold prices slipped for a second straight week on Friday (October 2), with spot gold down 0.3% or $10.7 to $4,166.58 per ounce as of 6:00 AM. The yellow metal was down more than 2% for the week and was heading for its second consecutive weekly decline. Spot silver also weakened, falling 0.4% or $0.3 to $60.7220, according to ET Now. In the domestic market, gold and silver futures on the Multi Commodity Exchange (MCX) settled at ₹1,47,724 per 10 grams and ₹2,25,545 per kg, respectively, with fresh MCX prices not available at the time of writing.
According to the CME FedWatch Tool, there is around an 80% probability of a rate hike by the Federal Reserve during the December FOMC meeting, up from previous expectations. This represents a dramatic shift from the 50% probability seen just a week ago and marks a significant increase from the 70% probability seen in the previous session. The Fed also sounded a bit less hawkish, with one official suggesting just one more hike this year could be enough, and that pulled October rate-hike odds down to around 50% from 70%. Kobeissi noted that bond markets now price 4 more quarter-point Fed hikes by June 2027, on top of September's increase, compared to traders expecting at least 100 basis points of cuts nine months ago.
The US Dollar Index (DXY) was up more than 1% for the week and was trading above the 102 level, adding to gold's downward pressure. A stronger US dollar typically weighs on gold prices, as it makes the yellow metal more expensive for holders of other currencies and reduces its appeal as an alternative asset. Rising US Treasury yields generally pressure gold prices, as higher bond returns increase the opportunity cost of holding the non-yielding precious metal. The 10-year Treasury yield touched its highest level since June 2007, while the 30-year Treasury yield rose to 5.60%, its highest level since 2002. Because gold pays no interest, higher yields raise the cost of holding it, making the precious metal less attractive to investors.
Rising energy prices can fuel inflation concerns and strengthen expectations of higher interest rates, putting downward pressure on gold prices. The Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation gauge, rose 0.3% in August, following an upwardly revised 0.1% increase in July. A stronger-than-expected rise in inflation can support gold prices, as investors often view the precious metal as a hedge against rising prices and currency debasement. However, higher oil prices have intensified concerns over inflation, prompting markets to price in the possibility of further monetary tightening from the Federal Reserve.
Technical analysis shows gold trading near key support levels with defined resistance and support zones. According to The Times of India, support levels are positioned at $4,100 and $4,025, while resistance is seen at $4,300 and $4,380. In Indian rupee terms, support is at ₹1,47,100 and ₹1,44,500, with resistance at ₹1,53,500 and ₹1,55,100. For silver, support is at $59 and $57, with resistance at $63.50 and $65.50, while in rupee terms, support is at ₹2,18,500 and ₹2,11,100, with resistance at ₹2,35,150 and ₹2,42,500. Christopher Tahir from Exness noted that persistent price pressures combined with resilient activity would reinforce expectations that central banks need to remain restrictive, keeping yields elevated and leaving gold vulnerable to further losses.
