Gold Prices Tumble Amid US Rate Hike Fears and Strong Dollar
The price of gold is declining globally, a rare occurrence in the market. In India, the normal gold price has dropped to around Rs 1,59,375 per 10 grams, while the MCX gold futures contract has declined by 0.3% to ₹153,997.00 per 10 grams.
The main reasons behind this fall are US interest rates, a strong dollar, and profit booking. The recent comments from Federal Reserve Chair Kevin Warsh suggested that keeping inflation under control is still a concern, leading to increased expectations of rate hikes in September.
US Treasury yields have also risen due to concerns about inflation and a global bond sell-off. This makes investments that earn interest more attractive than gold, which does not yield regular income. As a result, investors are selling some gold to take profits after the massive rally in August, when gold prices reached $4,696 per ounce.
Higher oil prices are also contributing to the pressure on gold, as US-Iran tensions have led to higher Brent crude prices of $91.8 per barrel as of September 1. Rising oil prices can lead to higher transportation and production costs, which can increase inflation and keep interest rates high, putting more headwinds for gold.