Gold slips to five-week low below Rs 1.50 lakh as Fed rate cut hopes weaken

As per the latest business developments, Gold saw a volatile session on September 15, pressured by rising crude prices and a stronger dollar ahead of the Fed’s two-day policy meeting starting tonight.

Spot gold declined 0.52 percent hovering just above $4,276 ​per ounce, while US gold futures declined 0.77 percent softer to $4,318 from its previous close.

Domestic gold futures for the October contract additionally declined 0.68 percent to Rs 1,50,201 per 10 grams on MCX (17:54 IST), whereas spot gold was trading at Rs 1,49,914 during the evening session.

Vedika Narvekar, Research Market observer at Anand Rathi Share and Stock Brokers, noted that gold is now at a five-week low, down more than 3 percent this month alone, after touching above $4,700 in late August.

"Two big triggers are driving the decline. First is the oil, as Saudi Arabia has shut its East-West pipeline following attacks. Elevated oil is feeding inflation fears, and markets are now pricing in a 92 percent chance of a Fed interest-rate gain the current week, its first since July 2023," Narvekar stated

Second is the 10-year US Treasury yield, which has surged to 5.02 percent, its highest since 2007, making gold less attractive.

"With the Fed decision tomorrow, we expect gold to stay under pressure. A hawkish hike could propel prices softer still, while any dovish surprise from Chair Warsh could spark a sharp relief surge," Narvekar stated.

Silver additionally witnessed a volatile session on Tuesday. Spot silver inched 0.27 percent hovering just above $63 ​per ounce, while US silver futures declined 0.64 percent to $63.72 from their previous close. Domestic silver futures for the December contract were down 0.65 percent to Rs 2,31,150 per kilogram on MCX (17:54 IST).

The Augmont Bullion report (Sept. 15) noted that gold-backed ETFs pulled in roughly $2 billion over the week—among the strongest hauls in months—suggesting institutional market participants used the dip to accumulate even as the near-term rate outlook turned more hawkish. Silver ETFs saw the opposite. Modest net redemptions, hinting that paper silver holders were quicker to de-risk ahead of the Fed meeting than their gold counterparts.

For the week ahead, the report estimates, "With the Fed decision now the dominant event risk on September 16, expect volatility to stay elevated into mid-week. A hike delivered largely as priced could trigger a relief bounce in both metals on the classic 'Sell the rumour, Buy the fact' pattern, while any hawkish surprise on the dot plot or the Chair's press conference could extend the current week's losses further—before central-bank and Asian physical buyers step back in to defend the softer end of the range."