Gold falls below ₹1.47 lakh per 10 grams on MCX: Key drivers

Gold prices remained under pressure on Tuesday, September 29, with the MCX October gold contract trading at ₹1.46 lakh per 10 grams, down 0.21%.

Gold prices are trading near a seven-week low

as markets expect the US Federal Reserve to keep interest rates higher for longer.

According to Prithviraj Kothari, Managing Director, RiddiSiddhi Bullions and President, India Bullion and Jewellers Association, the market is pricing in a growing chance of another Fed rate hike.

CME FedWatch is showing a 72.5% probability of an October rate hike, up from 57.6% last week, he said.

Higher US Treasury yields and a stronger dollar have been weighing on gold, while elevated crude oil prices are adding to inflation concerns. Kothari said ongoing US-Iran tensions and higher oil prices are keeping inflation and yield concerns elevated.

Gaurav Garg, Head of Research, Lemonn, said gold was recovering marginally in international markets but remained near a seven-week low as expectations of higher-for-longer US interest rates kept yields elevated.

Spot gold was around $4,130 an ounce, while the dollar-rupee exchange rate was near ₹96 per US dollar, according to Garg. Higher crude prices and US yields remain key risks for gold and other MCX commodities.

The upcoming US economic data, including consumer confidence, job openings, ADP employment data, PCE inflation and nonfarm payrolls, could provide further cues on the Fed's interest-rate trajectory and the next move in gold, Garg said.

What does this mean for gold investors?

Gold has undergone a sharp correction in September, with MCX gold falling below ₹1.5 lakh per 10 grams, according to Pinky Yadav, Commodity Fundamental Analyst, Choice Broking.

Yadav attributed the correction to higher crude prices, expectations of tighter US monetary policy, a stronger dollar, rising US Treasury yields and weakness in the Indian rupee.

At the same time, she said the longer-term factors supporting gold remain in place, including central-bank buying, global demand and investment allocation through gold ETFs.

For the near term, Aamir Makda, Commodity & Currency Analyst, Technical Research, Choice Broking, said key MCX support levels for gold are at ₹1.48 lakh per 10 grams and ₹1.47 lakh per 10 grams, with resistance at ₹1.49 lakh per 10 grams.