Gold Loses 5,847 Rupees and Silver 8,791 Rupees in a Week on MCX

Key Facts

December gold futures on India’s MCX lost 5,847 rupees, or 4.10%, in the week ended November 13, closing near 1.36 lakh rupees per 10 grams, according to a PTI report published by The Week on November 15. Silver futures fell 8,791 rupees, or nearly 5%, to settle at 1.76 lakh rupees per kilogram. The weekly losses came as a strong dollar and rising Treasury yields continued to pressure precious metals. An analyst at LKP Securities said these factors, alongside persistent inflation concerns, weighed on gold. In Friday’s session, futures moved in a narrow range and closed near unchanged, but ended the week down more than 4%.

The decline extended to international markets: U.S. December gold futures fell $188.6, or nearly 5%, over the week, ending at $3,886.3 an ounce. International silver also fell $2.82, or 5.43%, settling at $49.12 an ounce. These dollar prices show the metal’s movement in global markets, while MCX prices reflect rupee pricing in India. Local price movements therefore differ from their global counterparts, as the exchange rate factors into pricing the metal in Indian currency. Metals posted weekly losses in both markets, although the Indian gold close remained near 1.36 lakh rupees per 10 grams.

The week’s losses came amid debate over the outlook for U.S. interest rates. Bureau of Labor Statistics data showed the producer price index for final demand rose 0.3% in October, after increases of 1.4% in September and 0.4% in August, while its annual increase was 6.5% in the 12 months ended in October. The index excluding food, energy and trade services rose 0.5% in October, the same rate as in September. In its October statement, the Fed said that “inflation remains elevated” and that accumulating more information would help the committee determine the appropriate monetary policy stance to return inflation to its 2% target. The consumer price index also rose 0.4% in October after 0.6% in September, while the index excluding food and energy rose 0.3% in October, the same monthly increase recorded in September and August.

PTI coverage said hawkish comments from Fed officials and higher-than-expected inflation data pressured gold during the week, alongside a stronger dollar and rising Treasury yields. Reuters reported on November 12 that traders saw an 87% chance of a quarter-point rate hike in December, while they awaited U.S. producer price data due Friday. In another report, Reuters attributed gold’s November 12 decline to rising oil prices as hopes for peace in the Middle East faded, stoking inflation concerns and expectations that interest rates would remain high. David Meger said higher energy prices were a headwind for gold in a tight monetary environment. After the producer data were released, independent analyst Tai Wong said gold struggled to hold its early gains as bond markets remained under pressure from the Fed’s hawkish stance, adding that the core index’s monthly reading of 0.3% “remains far too hot for policymakers.”

An analyst at Brickwork Ratings said market expectations of a December rate hike had approached 90%, while Sharan expected global gold prices to move between $3,850 and $4,000 an ounce in the near term. This range follows the close of U.S. gold futures at $3,886.3 an ounce in the week ended November 13. Investors are awaiting a speech by Federal Reserve Chair Kevin Warsh on November 17 at 12:00 p.m., according to the central bank’s calendar. The U.S. retail sales report is also due on November 17; the published September reading was $745.0 billion, up 0.8% month over month. The Federal Open Market Committee meeting is scheduled for December 8 and 9, with the press conference on December 9.