Gold, silver prices down on MCX: Here we decode why
What's the story
Gold and silver prices have witnessed a decline on the Multi Commodity Exchange (MCX) today. The fall comes amid weak global cues and muted spot demand. As of today, the October futures contract of gold was trading at ₹1,52,315 per 10gm, down 0.30% from Friday's close. Similarly, the December futures contract of silver was down by 0.33% to ₹2,36,885 per kg during the same period.
Market impact
US job data impacts global commodity prices
The decline in gold and silver prices follows a report showing strong job growth in the US.
The unemployment rate remained steady at 4.1% in August, indicating an improvement in the labor market.
This has led to speculation about a possible interest rate hike by the US Federal Reserve next week, further impacting global commodity prices such as gold and silver.
Analyst insights
Experts' views on market trends
Jeffrey Roach, Chief Economist for LPL Financial, said, "August payrolls increased by 1,62,000, following an upward revision to July's gain of 21,000. This report will likely bring a few more FOMC voting members onto the hawkish side of the debate."
Ravi Singh, Chief Research Officer at Master Capital Services, noted, "The weakness in MCX gold is aligned with international gold, which has struggled near $4,400 after stronger-than-expected US payrolls sharply increased expectations of a September Fed rate hike."
Market pressures
Other factors affecting gold prices
Singh also noted that rising Treasury yields and renewed dollar strength are adding further pressure on gold prices.
He warned that escalating US-Iran tensions and higher oil prices are keeping inflation risks elevated.
With US PPI and CPI due this week, Singh said the inflation data will be crucial for determining whether rate-hike expectations strengthen further and whether gold faces another leg lower.