Gold prices have slipped below the $4,300-an-ounce mark, extending losses for the fourth consecutive week. As of 2:50 pm IST on Monday, spot gold prices were trading at around $4,290.5 an ounce. This decline comes despite gold's strong performance over the past year, with prices still up about 16.6 percent.
The recent surge in crude oil prices has added pressure on gold. Crude oil prices have moved towards four‑month highs, currently standing at $102.62 a barrel, after Saudi Arabia shut its key East‑West pipeline following drone attacks. This disruption, along with wider supply and shipping risks stemming from the Middle East conflict, has revived concerns that higher energy costs could keep global inflation elevated.
The rising inflation concerns have strengthened expectations of a more hawkish Federal Reserve. Markets are now pricing in roughly a 90 percent probability of a 25‑basis‑point rate hike on Wednesday. Higher interest rates tend to weigh on gold because the non‑yielding asset becomes less attractive relative to interest‑bearing investments.
The latest US inflation data has reinforced these concerns. Consumer prices rose 0.4 percent in August, following a 0.1 percent increase in July, while annual inflation stood at 3.4 percent. Core CPI, which excludes food and energy, increased 0.3 percent in August.
In India, MCX gold futures were trading at Rs 1,52,655 per 10 grams, down Rs 129 from the previous close of Rs 1,52,784. The contract moved between an intraday low of Rs 1,50,600 and a high of Rs 1,53,836.
The decline in gold prices is significant as it reflects the market's response to changing economic conditions and geopolitical tensions. Investors are closely watching the Federal Reserve's policy decision and its potential impact on interest rates and inflation.