Gold and silver prices rose in international markets on Friday, October 9, as a softer US dollar and declining US Treasury yields supported demand for precious metals.
However, expectations of further monetary tightening by the US Federal Reserve and persistent inflation concerns could limit gains.
On the COMEX, December gold futures were trading at $4,197.10 per ounce, up $40.10 or 0.96% from the previous close of $4,159.70 an ounce. Prices touched an intraday high of $4,199 and a low of $4,156.10 an ounce .
COMEX silver futures were at $60.395 per ounce, up $0.971 or 1.63% from the previous close of $59.460 an ounce. The metal moved between $59.450 and $60.430 an ounce during the session.
The gains came as the US dollar’s rally paused, making dollar-denominated bullion more affordable for investors holding other currencies. The benchmark 10-year US Treasury yield also declined for a second consecutive session, lending support to gold.
Why are gold and silver prices rising?
Gold and silver have benefited from a softer dollar and lower Treasury yields. Gold does not pay interest, so a decline in yields can reduce the opportunity cost of holding the metal instead of interest-bearing assets.
However, the outlook remains uncertain. Higher oil prices and concerns over supply disruptions in the West Asia have added to inflation worries, potentially increasing pressure on the US central bank to maintain a restrictive monetary policy.
Gold is traditionally considered a hedge against inflation, but persistently high interest rates can weigh on its appeal. Silver, meanwhile, is influenced by both investment demand and its industrial applications, making its price movements dependent on a wider set of factors.
Fed rate decision remains a key trigger
The US Federal Reserve’s interest-rate outlook remains an important factor for precious metals. St. Louis Fed President Alberto Musalem has said that the central bank may need to raise rates again to bring inflation back to its 2% target, although he has not specified what action policymakers should take at their upcoming meeting.
According to the CME FedWatch tool, traders were pricing in an 18% probability of a rate hike in October and an 82% probability of a hike in December, as per the figures provided.
Investors will watch upcoming US economic data for further clues on inflation and monetary policy. Any change in rate expectations could influence the dollar, bond yields and bullion prices.
Geopolitical developments in focus
Developments in the West Asia could also affect safe-haven demand. US President Donald Trump said Washington would not launch an attack on Iran before the November midterm congressional elections, while indicating that discussions between the two countries were progressing.
Any escalation in geopolitical tensions could support demand for gold as a safe-haven asset. Conversely, signs of easing tensions could reduce some of that support.
What should investors watch?
For Indian investors, international bullion prices, movements in the US dollar, Treasury yields and the rupee will be important factors to track. COMEX prices are quoted in US dollars per troy ounce and do not translate directly into domestic gold and silver prices, which are also influenced by currency movements, import duties, taxes and local market premiums.
-With Reuters inputs
NOTE TO READERS
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers should consult certified experts before making any investment decisions.