MCX Gold Slumps Amid Rising Bond Yields and Hawkish Fed Stance

MCX gold prices have taken a hit this week, falling ₹3,500 per 10 grams to ₹1,50,891 for October delivery. This decline is more than double the gains recorded in the previous week of ₹1,597. The weakness in gold prices has also reversed September's gains, making it a stark contrast from the strong increases seen in August.

The main challenge facing gold has been rising bond yields, driven by elevated crude oil prices. This has raised concerns that the US Federal Reserve could further tighten interest rates. In Thursday's trade, the US 10-year yield reached its highest level in 19 years, while the 30-year Treasury yield hit a high not seen since 2004.

Fed Governor Michael Barr stated that further rate hikes 'are likely to be needed' to bring inflation back to the Fed's 2% target. This hawkish stance has made gold less attractive to investors, who are turning to yield-bearing assets instead of traditional safe-haven investments like gold.