Gold Soars Nearly 5% on Weaker Dollar and Reduced Rate Hike Expectations
New Delhi, India - Gold prices surged nearly 5% on a weekly basis due to a weaker US dollar and reduced expectations of an imminent Federal Reserve rate hike. The price of gold futures (October) on the Multi Commodity Exchange (MCX) stood at Rs 1,62,440 per kg, while silver futures for September advanced 1.28%. The price of 10 grams of 24-carat gold was up to Rs 1,58,860 from Monday's opening price of Rs 1,54,066.
Analysts said that softer US inflation, weaker retail activity, and subdued consumer sentiment continued to temper expectations of near-term monetary tightening. The markets are largely pricing out a September rate increase, they added. A temporary pullback in Treasury yields following the US Treasury's announcement to double its long-dated bond buybacks also created a supportive backdrop for gold and silver.
The yellow metal benefited from a second consecutive weekly gain in crude oil due to lingering tensions in West Asia. WTI crude gained around 5.7% for the week, trading above $86 a barrel. The Indian rupee eased nearly 0.3% during the week, providing additional support to MCX gold and silver by raising the domestic cost of imported bullion.