Gold Price Today, October 23: Gold prices traded nearly flat on Friday, with the yellow metal remaining on track for its second consecutive weekly decline as rising inflation levels contributed to growing expectations of a rate hike.
As of 6:35 am, spot gold was nearly unchanged at USD 4,019.90. The precious metal was down 3.6 per cent for the week so far, marking a second straight weekly decline. Spot silver, meanwhile, fell 0.7 per cent to 54.2280.
On the domestic market front, gold and silver prices were not trading at the time of writing this report. Gold and silver futures on the Multi Commodity Exchange (MCX) settled at Rs 1,43,303 per 10 grams and Rs 1,99,917 per kilogram, respectively.
Gold Price Today: Why is gold down this week?
The rise in energy prices, supported by the conflict in the Middle East and uncertainty surrounding the Strait of Hormuz traffic, was among the key factors that weighed on bullion during the week.
Rising energy prices can fuel inflation concerns, raising expectations that central banks may keep interest rates higher for longer.
According to CME’s FedWatch Tool, expectations for a rate hike by the Federal Reserve stood at 80 per cent during the December FOMC meeting. Higher interest rates increase the opportunity cost of holding non-yielding assets such as gold, putting pressure on prices.
The prolonged expectations of higher interest rates also supported the US dollar and Treasury yields, reducing the appeal of non-yielding gold and weighing on bullion.
The US dollar against a basket of six major currencies showed some strength, with the DXY trading at 101.55. The 10-year bond yield slipped below the 5 per cent mark but remained at levels that continued to exert pressure on bullion prices.
US-Iran developments in focus
According to the latest update, the United States and Israel have drawn up plans for renewed military strikes on Iran after the US midterm elections, according to a report by The New York Times. The development has added to uncertainty surrounding the Strait of Hormuz, which has been pushing oil prices higher.
Gold Price Outlook
Market participants are closely watching the upcoming US Federal Open Market Committee (FOMC) meeting scheduled next week, along with the US interest rate decision due on October 28.
The outcome of these events is expected to provide further direction for gold prices.
Developments related to the US-Iran conflict in the Middle East are also being tracked, as they have a direct impact on energy prices and could influence the direction of bullion.