Gold Prices Plunge Over 2% Amid Rising Bond Yields and Crude Oil Prices

Gold prices are plummeting due to a combination of factors. Inflation worries and expectations of further interest rate hikes by the US Federal Reserve have led to a sharp rise in bond yields, making gold less attractive as an investment option.

The increase in crude oil prices has also reinforced the case for Fed tightening, which has resulted in a stronger dollar and steeper yield curve. This is working against non-yielding bullion like gold.

Ashish Rajodiya, Head, Commodities at PL Capital, explains that the pressure on MCX Gold is coming from a sharp US Treasury bond selloff, with the 10-year yield reaching its highest level since 2007 at 5.13%, and the 30-year yield at 5.44% since 2004.

According to Rajodiya, gold prices have support at Rs 1,48,000 and Rs 1,46,000, with resistance at Rs 1,52,500 and Rs 1,55,000. He believes that the metal's next move will depend on two factors: the Fed's October rate decision and whether diplomatic engagement between the US and Iran on Hormuz firm up into an actual de-escalation.

Manoj Kumar Jain of Prithvi Finmart expects gold and silver to see continued volatility this week, as traders track movements in crude oil prices, the dollar index, geopolitical tensions, and developments in the US-Iran peace talks.