Gold price today: Why gold is down 3.5% and silver plunges over 14% in October

Gold Price Today: Gold prices declined on Friday, October 30, extending their monthly losses as higher US Treasury yields, expectations of a potential Federal Reserve rate hike and a stronger US dollar weighed on bullion.

Spot gold was down 0.2 per cent at USD 4,012.34 as of 5:48. The yellow metal has slipped around 3.5 per cent so far in October. Spot silver mirrored the trend, falling 0.4 per cent to trade around USD 52. The white metal has declined over 14 per cent this month.

The weakness in precious metals comes as market attention remains focused on US monetary policy, inflation data and the outlook for interest rates. Higher yields and expectations that the Federal Reserve could keep monetary policy restrictive have reduced the appeal of non-yielding gold.

Why is gold down in October?

Higher US treasury yields and real interest rates

Rising US Treasury yields have weighed on gold by increasing the returns available from bonds and cash. Since gold does not pay interest, higher yields reduce its relative attractiveness to investors.

Fed rate-hike expectations

Expectations that the Federal Reserve may raise interest rates again in December have added pressure on bullion. The prospect of tighter monetary policy increases the opportunity cost of holding gold.

The CME FedWatch Tool indicates a 74.9 per cent chance of a rate hike by the Federal Reserve.

Stronger US Dollar

A stronger US dollar has also weighed on gold prices. Since gold is priced in dollars, a stronger greenback makes the metal more expensive for overseas buyers, potentially reducing demand and putting pressure on XAU/USD.

In October, the US dollar gained about 0.4 per cent against a basket of six major currencies, adding to the pressure on the yellow metal.

Oil-price surge and inflation concerns

Energy prices remained elevated, with Brent trading around USD 112 per barrel and WTI trading around USD 103.

Rising oil prices have fuelled inflation concerns, adding to expectations that the Federal Reserve could maintain higher interest rates instead of cutting them. Such expectations have been negative for gold.

Hot US inflation data

Stronger-than-expected US Consumer Price Index (CPI) and Producer Price Index (PPI) data have supported expectations of tighter monetary policy. This has weighed on gold despite its traditional role as an inflation hedge.

Reduced safe-haven demand

Geopolitical tensions and equity-market stress have not been enough to offset the pressure from persistent inflation concerns and elevated interest rates. These factors have outweighed gold's usual safe-haven appeal.

Gold Price Today: Outlook

Market attention remains focused on the US-Iran conflict and upcoming US economic data for further cues on bullion prices.

Bottom Line

Gold and silver have both recorded losses in October, with gold down around 3.5 per cent and silver declining over 14 per cent so far this month. The outlook remains focused on developments surrounding the US-Iran conflict and US economic data.

(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)

Stay informed with ET Now’s in-depth coverage of Business News, Stock Market updates, IPO announcements, Company News, and Personal Finance Updates. Track live Share Market data, Mutual Funds, and the latest news events in real time.