Gold Gains on Cooling Crude Oil Prices, Capped by Hawkish Fed Outlook

Gold prices have gained over 1% this week as cooling crude oil prices have boosted sentiment in the precious metal. According to India Bullion and Jewellers Association data, the price of 24-carat gold rose to ₹1,53,727 per 10 grams on Friday from ₹1,51,938 a week earlier.

This marked a weekly increase of nearly 1.18%, but profit-booking emerged in the futures market on Friday, with MCX gold futures for October delivery declining 0.84% to ₹1,54,263 per 10 grams.

The decline in crude oil prices below $100 per barrel provided support to gold after concerns surrounding the closure of Saudi Arabia's key pipeline weakened markets' assessments that the disruption would have a smaller impact on global supplies than initially feared.

However, the recovery in gold prices lost momentum after the US Federal Reserve delivered a hawkish policy outlook, raising interest rates by 25 basis points and taking the federal funds target range to 3.75%, 4%. Several Fed officials indicated that further monetary tightening could follow, with markets placing the probability of another rate hike in October at around 55%.