Gold prices in India today have fallen to six-month lows.

Gold prices in India today have fallen to six-month lows.

MCX futures fall 0.16% to ₹49,231 per 10 gram.

Gold prices in India remained near 6-month lows as MCX futures fell 0.16% to ₹49,231 per 10 gram. Silver futures dipped 0.4% to ₹56,194 per kg. On Thursday, gold had tumbled 1.4% while silver 1% in Indian markets, tracking a global selloff in precious markets. Gold is down about ₹1,500 so far this week, from Monday's highs.

MCX or Multi Commodity Exchange is an Indian commodity exchange with headquarters in Mumbai. It offers trading in bullion, non-ferrous metals, energy and other commodities derivatives such as crude oil and natural gas.

The fall in gold prices can be attributed to a number of factors:

1) Gold is an international commodity, and it is priced in US dollars. So, the price movement of the yellow metal in India is closely linked to the greenback and import duties.

2) In global markets, the yellow metal struggled near two-year lows amid elevated US dollar and prospects of aggressive US rate hikes. Spot gold was t $1,664.48 per ounce and has fallen 3% so far this week. A US dollar and firm bond yields dampen the appeal of the yellow metal. A stronger greenback makes gold expensive for overseas buyers. Though gold is considered an inflation hedge rising interest rates increase the opportunity cost of holding the non-yielding asset.

3) Among other precious metals, spot silver dipped 0.7% to $19.01 per ounce.

4) Despite the recent dip in prices, gold ETF inflows remain muted. The holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose 0.15% to 962.01 tonnes on Thursday from 960.56 tonnes on Wednesday.

5) Applications for US unemployment insurance fell for a fifth straight week, and while retail sales unexpectedly rose in August, the prior month’s number was revised sharply lower. These reports came on the heels of US consumer and producer price indexes earlier this week that showed inflationary pressure in the economy.

6) The US Federal Reserve is increasingly expected to implement a rate hike of at least 75 basis points next week. Higher rates tend to weigh on non-interest bearing bullion.

7) “Also weighing on gold prices are concerns about consumer demand as virus related restrictions hamper economic activity in China. Gold may remain volatile as market player react to economic numbers and central bank comments however general bias may be on the downside on expectations that Fed may continue with aggressive hikes," Kotak Securities said in a note.

8) “Trend in the US dollar, bond yields and equities may continue to affect gold and silver and focus will be on economic data, central bank comments and development relating to Europe’s energy crisis and China’s virus spread," the brokerage added.

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Gold is down about ₹1,500 so far this week.

Gold is an international commodity, priced in US dollars.

The price of gold is determined by the global market and it is denominated in US dollars. So, when the dollar strengthens against other currencies, gold becomes expensive for buyers using other currencies. This puts downward pressure on prices and demand for the metal falls. Similarly, a weaker dollar makes gold cheaper for buyers using other currencies and this boosts demand, putting upward pressure on prices.

The price movement of the yellow metal in India is closely linked to the greenback and import duties.

The price of gold in India is also influenced by the country's import duties on the precious metal. When duties are increased, it makes imported gold more expensive, leading to lower demand and prices. Conversely, lower import duties make gold cheaper and this usually leads to higher demand and prices.

In global markets, the yellow metal struggled near two-year lows amid elevated US dollar and prospects of aggressive US rate hikes.

Spot gold was trading at $1,664.48 per ounce on Friday and has fallen 3% so far this week as a strong US dollar and prospects of aggressive interest rate hikes from the Federal Reserve weighed on demand for the safe-haven asset. A stronger greenback makes gold more expensive for overseas buyers while higher rates reduce the appeal of non-yielding bullion as an investment option.

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Despite the recent dip in prices, gold ETF inflows remain muted.

The holdings of SPDR Gold Trust rose 0.15% to 962.01 tonnes on Thursday.

Despite the recent dip in prices, gold ETF inflows remain muted. The holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose 0.15% to 962.01 tonnes on Thursday from 960.56 tonnes on Wednesday.

Applications for US unemployment insurance fell for a fifth straight week, and while retail sales unexpectedly rose in August, the prior month’s number was revised sharply lower.

Applications for US unemployment insurance fell for a fifth straight week, and while retail sales unexpectedly rose in August, the prior month’s number was revised sharply lower. These reports came on the heels of US consumer and producer price indexes earlier this week that showed inflationary pressure in the economy.

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The US Federal Reserve is increasingly expected to implement a rate hike of at least 75 basis points next week.

Higher rates tend to weigh on non-interest bearing bullion.

Gold is considered a safe haven asset, and it is often used as a hedge against inflation. When interest rates are increased, the opportunity cost of holding gold goes up, as investors can earn a higher return by investing in assets that offer a yield. This typically leads to lower demand for gold, and consequently, lower prices.

Gold may remain volatile as market player react to economic numbers and central bank comments.

The US Federal Reserve is expected to announce an interest rate hike next week, which could lead to further volatility in the gold market. Investors will be closely watching economic data and central bank comments for clues about the future direction of rates. If the Fed signals that more hikes are likely in the near future, this could weigh on gold prices. However, if the central bank takes a more dovish stance, this could provide support for the yellow metal.

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