Gold prices on the Multi Commodity Exchange (MCX) closed sharply lower for the week ended September 25, 2026, losing ₹3,500 per 10 grams as a surge in US Treasury yields and hawkish comments from Federal Reserve officials dampened investor appetite for the yellow metal. The October delivery contract settled at ₹1,50,891, reversing the ₹1,597 gain recorded in the previous week and turning September's overall performance into a loss.
Why gold weakened
The primary driver of the sell-off was a sharp rise in US Treasury yields. The 10-year note yield climbed to its highest level in 19 years, while the 30-year bond yield hit levels not seen since 2004. Higher yields increase the opportunity cost of holding non-yielding assets such as gold, prompting traders to reduce their bullion positions.
Adding to the pressure, Federal Reserve Governor Michael Barr said in a speech this week that further interest rate increases “are likely to be needed” to bring inflation back to the central bank's 2% target. Separately, New York Fed President John Williams indicated the central bank is no longer offering explicit forward guidance, saying policymakers will rely on incoming economic data to determine future moves.
Inflation in the United States has remained stubbornly high, and the Fed raised its short-term interest rate last week for the first time in three years. While gold is traditionally viewed as a hedge against rising prices, higher interest rates make yield-bearing investments more attractive relative to bullion.
Geopolitical backdrop and crude oil
Crude oil prices, which had been climbing, retreated modestly during the week after reports that negotiators in New York were discussing a phased path out of war involving Iran reopening the Strait of Hormuz in exchange for Washington lifting its economic blockade. Despite the pullback, crude was still on track for a weekly gain, which had earlier contributed to inflationary concerns and the bond yield spike.
Outlook for domestic gold prices
Brokerage firm ICICI Global Markets expects local gold prices to remain driven primarily by global developments, with volatility in the Indian rupee adding an element of uncertainty. The brokerage noted that physical demand should receive some support as the festive and wedding season progresses. It maintained a view that domestic gold prices are likely to trade within a range of ₹1,40,000 to ₹1,60,000 per 10 grams over the remainder of 2026.
For the most current pricing, you can check the live gold price.
Key takeaways
- MCX gold for October delivery fell ₹3,500 per 10 grams for the week, closing at ₹1,50,891.
- US 10-year Treasury yields hit a 19-year high, while 30-year yields touched 2004 levels.
- Fed Governor Michael Barr signalled further rate hikes may be needed; the central bank raised rates last week for the first time in three years.
- ICICI Global Markets sees domestic gold trading in a ₹1.4–1.6 lakh per 10 grams range through the rest of 2026.
Common questions
Why do rising interest rates push gold prices lower?
Gold does not pay interest or dividends, so when central banks raise rates, fixed-income assets such as bonds become more attractive. Higher rates also strengthen the US dollar, which typically weighs on dollar-denominated gold prices.
What is the significance of US Treasury yields for gold?
US Treasury yields represent the return on risk-free government debt. As yields rise, the opportunity cost of holding gold – a non-yielding asset – increases, prompting investors to reduce their gold holdings. Yield moves are one of the most important factors for short-term gold price direction.
In summary, this week's decline in MCX gold was driven by a powerful combination of rising US yields, hawkish Fed rhetoric, and persistent inflation fears. While the festive season may support physical demand, the macro environment remains challenging for bullion in the near term.