On Monday, Gold prices in India extended losses after falling 0.3 per cent in the futures market. On MCX, gold futures were down 0.3 per cent to a six-month low of Rs 49,237 per 10 gram. Silver futures on MCX were flat at Rs 56820 per kg. In domestic markets, gold slumped 3 per cent or about Rs 1,500. In global markets, the yellow metal fell as much as 0.4 per cent to $1,668.28 an ounce. 

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In Fed’s policy, though most analysts expect a 75 bps hike, some see the US central bank hiking by 100 basis points. High-interest rates increase the opportunity cost of holding non-yielding bullion.

However, in September,  US consumers’ near-term inflation expectations fell to a one-year low. “While there are enough reasons for the Fed to continue with rate hikes, improving inflation has eased pressure on the central bank to act aggressively. While the Fed’s stance has kept the US dollar supported, upside remains challenged by the monetary tightening stance of other central banks and increased possibility of intervention in the currency market,” Kotak Securities said. 

Also, the Bank of England has a meeting this week to analysts expect a 50 to 75 basis-point hike. Recently, the gold price declined, and flows into gold-backed ETFs remained muted. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.1 per cent to 960.85 tonnes on Friday from 962.01 tonnes on Thursday.

“Gold has fallen sharply in the last few days and set fresh lows indicating strong bearish sentiment. But we recommend some caution due to increased volatility in the US dollar, and fresh selling should be at corrective rebounds,” said Kotak Securities in a note.