Gold extends losses, falls to nearly Rs 1.54 lakh/10 gm. Time to buy?

Gold prices slipped on the MCX but extended gains in international markets on Tuesday, as Treasury yields eased from recent highs and expectations of a US Federal Reserve rate hike cooled.

Gold futures for October delivery on the MCX fell Rs 133 per 10 grams to Rs 1,54,129 per 10 grams on Tuesday morning. December contracts declined to around Rs 1.56 lakh per 10 grams.

In international markets, gold prices inched higher as US Treasury yields eased from recent highs, while traders awaited the release of the Federal Reserve’s meeting minutes. Spot gold rose 0.2% to $4,342 an ounce, after falling nearly 2% in the previous session. Meanwhile, US gold futures for December delivery fell 0.6% to $4,396.30.


US President Donald Trump said the US is not engaged in talks with Iran, further stoking supply concerns, even as he insisted that the Strait of Hormuz remained open to traffic. Trump also asserted US control over the strategic waterway in an AI-generated image depicting the Strait as “NEW US Territory.” Iran hit back, warning that his claims would be “corrected” and dismissing them as delusions.

Rising oil prices could strengthen the case for higher interest rates to contain inflation, despite recent US economic data showing unexpected job losses, softer inflation and weak July retail spending.

Also read | Gold inches higher, focus on Fed minutes

While gold is known as an inflation hedge, higher rates typically weigh on gold prices as they strengthen the dollar and make yield-bearing assets more attractive to investors. Traders are currently pricing in a 65% chance that the Federal Reserve will keep rates unchanged and a 35% chance of a rate hike in September, according to the CME FedWatch Tool.

What lies ahead?

The recent pullback in gold prices may have created an opportunity for investors to gradually accumulate the yellow metal, according to Jefferies’ Global Head of Equity Strategy Christopher Wood and billionaire hedge fund manager John Paulson. Both believe the precious metal could be at the beginning of a long-term bull run.

“As people lose faith in paper currencies, gold as an alternative will continue to grow,” Paulson said in an interview with CNBC. Paulson, whose bet against subprime mortgages became one of the most profitable trades in Wall Street history, turned his attention to gold in 2009.

“Gold is becoming the most apt reserve currency in the world, replacing fiat currencies,” Paulson said. “The demand from central banks, for instance, has continued to grow, as has the private sector.”

Wood, in his Greed and Fear report, said investors should begin accumulating gold and gold mining stocks again after an extended pause.

Also read | Gold prices jump 7% to log best weekly gain in 8 months. Start of another yellow metal bull run?

(With inputs from agencies)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)