Indian Gold Rate Dips By Around Rs. 1600 This Week, 10-Yr US Bond Yield Historically High

Indian gold rates swamped significantly this trading week and fell by around Rs. 1600/10 grams. Today, on October 15, the yellow metal continued to face a sharp price drop. The 22-carat gold rate is quoted at Rs. 46,200, and the 24-carat gold rate is quoted at Rs. 50,400/10 grams, falling by Rs. 550 - Rs. 600, respectively. Additionally, the silver price also fell to Rs. 5530/100 grams, falling by Rs. 200 today. The downturn of gold and silver prices is expected to help retail gold sales to gain this festive season.

Indian gold prices depend on international rates, as the country imports a large amount of gold from foreign markets. The movement in the US Bond Yields and the US Dollar index impacts the global gold rates significantly. As the US Federal Reserve is now raising the interest rate to control inflation and restricting liquidity in the country, assured income options like the US Bonds are getting more profitable. Hence, the rates of gold and silver are falling due to sell-off pressure.

Meanwhile, the 2-year Treasury bond yield increased to around 2-year Treasury bond yield 4.496%, and the 10-year U.S. Treasury yield increased sharply to around 4.022%, at a historically high level. Today, the US Dollar index increased to 113.30, gaining by 0.83%, at the time of writing. Additionally, the Michigan Consumer Sentiment rallied in October, which has again pulled down gold prices globally.

Commenting on the matter, OANDA senior market analyst Edward Moya told Kitco News, "This is getting dangerous for gold. The market is not showing relief with dollar strength. What makes this so tough is seeing the Japanese yen at levels lower than the Asian crisis and the British pound in the midst of dealing with market financial stability risks. We are looking at an environment where the dollar will trade off of safe-haven flows and Fed rate hike expectations...Inflation is proving to be stickier. Markets will be slowly bumping up their Fed rate hike expectations. And that, to me, is a game changer for the gold outlook."

At that time, if the US Fed increased the pace of raising the interest rate, gold rates can fall further. Analysts are pointing out that the next support level for gold is $1,615/oz, followed by $1,580/oz.