Gold Prices Plunge 3% on US Rate Hike Expectations

Gold prices took a hit this week due to repricing of US monetary policy and a surge in crude oil, which raised inflation concerns. On Friday, MCX gold futures (October) inched up 0.03% while MCX silver futures (September) shed 0.07%. The price of 10 grams of 24-carat gold was at Rs 1,54,884 on Friday down from Rs 1,59,578 seen last Friday.

The precious metals touched a three-month high mid-week after a sharp selloff but pulled back on Friday as markets reacted to geopolitical tensions, shifting Federal Reserve expectations and stronger-than-expected US labour data. A blockbuster August jobs report reversed much of the dovish shift from the US Federal Reserve in a single session.

Bullion initially found support from geopolitical uncertainty and weakness in the US dollar but was affected by the escalation in the US-Iran conflict, including Iran's retaliatory attack on Kuwait following renewed US strikes on Iranian rocket launchers near the Strait of Hormuz. This surged crude oil prices, which pushed expectations of a September Federal Reserve rate hike sharply higher.