Gold Price Today, October 21: Gold prices remained under pressure on Wednesday, October 21, extending their decline for the fourth consecutive session as a stronger US dollar, rising Treasury yields and expectations of further monetary tightening weighed on the precious metal.
As of 6:00 am, spot gold declined 0.1 per cent, or USD 6, to trade at USD 4,119.40. Spot silver also traded lower at USD 57.97.
On the domestic market, gold and silver prices were not trading at the time of writing. Gold and silver futures on the Multi Commodity Exchange (MCX) had settled at Rs 1,46,482 per 10 grams and Rs 2,11,500 per kg, respectively.
The decline in gold prices comes amid renewed strength in the US dollar, elevated bond yields and expectations that the US Federal Reserve could maintain its hawkish stance amid persistent inflation concerns.
Why are gold prices falling today?
One of the key factors weighing on gold prices is the strengthening US dollar. The US Dollar Index, which measures the greenback against a basket of six major currencies, was up around 0.1 per cent.
A stronger dollar makes gold more expensive for holders of other currencies, reducing its appeal.
Rising US Treasury yields have also added to the pressure on bullion. The US 10-year Treasury yield rose about 0.3 per cent to 5.133 per cent, increasing the attractiveness of interest-bearing assets compared with non-yielding assets such as gold.
Higher bond yields typically increase the opportunity cost of holding gold, prompting investors to shift funds towards fixed-income instruments.
Rising crude oil prices fuel inflation concerns
Higher crude oil prices have added to concerns over inflationary pressures across global economies.
Brent crude traded near USD 110 per barrel, while West Texas Intermediate (WTI) hovered around USD 98.55 per barrel.
Persistent inflation could prompt central banks, particularly the US Federal Reserve, to keep interest rates elevated for longer or deliver additional rate hikes. Such an environment is generally considered negative for gold, as higher interest rates strengthen the dollar and increase returns on competing assets.
Fed rate hike expectations weigh on gold
According to the CME FedWatch Tool, markets are pricing in a more than 90 per cent probability of a Federal Reserve rate hike during the December Federal Open Market Committee (FOMC) meeting.
Gold Price Outlook
Investors will monitor crucial US economic indicators due later this week for fresh clues about the direction of interest rates.
Market attention will also remain on developments surrounding the Federal Open Market Committee (FOMC) and the Federal Reserve’s policy outlook. Any signs of persistent inflation or a preference among policymakers for keeping interest rates higher for longer could extend pressure on gold prices.
However, weaker-than-expected economic data or a softer stance from Federal Reserve officials may support the precious metal and help limit further downside.