Gold falls Rs 600 on weak domestic demand

Gold prices fell by Rs 600 to Rs 1.55 lakh per 10 grams in the national capital on Thursday as weak domestic demand weighed on the precious metal.

The yellow metal of 99.9 per cent purity had closed at Rs 1,55,600 per 10 grams on Wednesday. Silver, however, held steady at Rs 2.42 lakh per kilogram, inclusive of all taxes, according to local traders. Traders said weak demand in the domestic market weighed on gold prices. “Gold edged lower on Thursday, tracking overnight weakness in international markets after the Federal Reserve delivered a hawkish policy message,” Saumil Gandhi, Senior Analyst - Commodities at HDFC Securities, said.

The US Federal Reserve raised its benchmark interest rate by 25 basis points to 3.75-4 per cent, as widely expected, marking its first-rate increase in three years.

Fed Chair Kevin Warsh’s emphasis on persistent inflationary pressures, along with stronger-than-expected August core inflation, reinforced expectations that monetary policy could remain restrictive. However, bullion found some support in global markets on Thursday as Treasury yields, crude oil prices and the dollar index pulled back slightly. Spot gold rose $52.85, or 1.24 per cent, to $ 4,317.11 per ounce, while silver gained nearly 2 per cent to $64.06 an ounce.

“Spot gold is staging a recovery and traded over 1 per cent higher around $4,310 an ounce in global markets as crude oil, Treasury yields, and dollar index have pulled back slightly,” Praveen Singh, Head of Commodities at Mirae Asset Sharekhan, said.

Vedika Narvekar, Research Analyst of Commodities & Currencies at Anand Rathi Share and Stock Brokers Ltd, said the bounce was not driven by gold-specific factors but by a cooling in Treasury yields after their sharp rise on Wednesday.

Treasury yields had touched their highest level since 2024 following the Fed’s rate hike.

“That pullback in yields is what’s giving gold some breathing room on Thursday. The Fed did deliver its first hike since 2023, a quarter point, but that was already priced in.

“What caught attention was the tone, as Warsh made it clear inflation remains the bigger worry, and the Fed’s median rate outlook for end-2026 moved up to 4.1 per cent from 3.8 per cent, hinting more hikes could follow,” she added.