India's MCX gold price slips below ₹1.43 lakh as US data fuels rate-hike expectations
MCX gold futures fell below ₹1.43 lakh per 10 grams on Oct. 30, driven by stronger-than-expected US inflation figures and growing expectations of a December Federal Reserve rate increase.
India's Multi Commodity Exchange (MCX) gold futures dropped below the ₹1.43 lakh per 10-gram threshold on Friday, ahead of the Diwali festival. The price fell 0.99% to ₹1,41,181, while spot gold internationally slipped to $3,980.40 an ounce, its lowest level since mid-July.
Analysts linked the decline to recent US economic data. Stronger-than-expected US inflation and robust GDP growth have heightened expectations that the Federal Reserve will raise rates in December, reducing demand for non-yielding assets such as gold.
"Gold has slipped below the crucial $4,000 mark as stronger-than-expected US inflation data and rising expectations of a December Fed rate hike are reducing demand for non-yielding assets," said Gaurav Garg, head of research at Lemonn.
UBS analyst Giovanni Staunovo noted that the combination of solid US GDP numbers and higher oil prices is pressuring the Fed to consider further rate hikes. Reuters quoted Staunovo saying that gold could rise to $5,000 or higher next year if the Fed eventually cuts rates and inflation eases.
Market commentators suggested that the recent price drop may present a buying opportunity for long-term investors. Amit Goel, chief global strategist at PACE 360, told Mint that lower gold and silver prices could offer potential for higher returns over time.