Stronger Dollar and Yields Weigh on Gold and Silver Prices

Gold and silver prices are under pressure due to a stronger US dollar and rising Treasury yields, even as softer US jobs data has reduced the likelihood of an immediate Federal Reserve rate hike. On Tuesday, spot gold saw a modest rise of 0.42%, reaching around $4,158 an ounce, while December US gold futures climbed about 0.56% to $4,180. Despite this slight recovery, gold remains near its two-month low, settling at $4,128.40 on October 5, its lowest closing level since early August.

Silver has been particularly sensitive to broader economic conditions, with spot silver hovering near $61.10 an ounce on Tuesday, close to a two-month low. The metal's industrial-demand component adds to its vulnerability amid global growth concerns and tighter monetary policies. The dollar index remains firm at 102.16, having recently touched an 18-month high of 102.53, while the euro weakened to around $1.12 due to political and fiscal pressures in Europe.

The US 10-year Treasury yield climbed above 5.28%, its highest level since 2002, before easing slightly on Tuesday. Higher yields increase the opportunity cost of holding non-interest-bearing assets like gold and silver. The weaker US labor market, with September payrolls increasing by only 29,000, has lowered expectations of a Fed rate hike in October to 21%, though December remains more hawkish.

For Indian investors, the macroeconomic tug-of-war remains critical. On October 6, MCX gold was around ₹1.50 lakh per 10 grams, and silver around ₹2.26 lakh per kg, keeping domestic prices elevated despite the global correction. The September ISM Services report showed rising inflation concerns, with the Prices Index reaching its highest level since July 2022.