Gold slides in Chennai as crude, dollar and yields weigh before Diwali

what happened

According to Moody's, gold fell sharply this week. MCX gold futures lost about 3.5%, while retail 24K gold in Chennai dropped 3.85%, to Rs 1,42,480 per 10 grams. Globally, bullion hit a three-month low and traded near $4,000 an ounce ahead of the Federal Reserve's October 27-28 meeting.

The pressure has come from higher crude, a firmer dollar and elevated US Treasury yields. Brent reached its highest level in more than five months after Houthi attacks in Saudi Arabia, and rising energy costs have revived inflation worries and the prospect of tighter monetary policy. Most traders expect the Fed to hold rates steady, but strong US consumer and producer inflation data have raised the odds of tightening later this year.

Emkay Global said the decline was amplified by investors selling liquid assets to meet margin calls after a sharp correction in US equities. Attention now turns to next week's PCE inflation data.

why it matters

For gold, the key driver is rate expectations: higher oil and yields weigh on the metal, while easing rate expectations could support it. IAGES expects jewellery demand to stay strong during the festive season and sees the lower prices as a buying opportunity.

market impact

Gold and silver: pressure from higher yields and the dollar; Fed rate expectations set the direction.

tags

instruments