Hindustan Zinc, Vedanta to NALCO: Why are metal stocks falling today?
The Nifty Metal index also came under significant selling pressure, declining more than 2% in intraday trade amid a broader market sell-off. Hindustan Zinc fell as much as 4.7% to its day's low of ₹592.05. NALCO declined 3.8% to ₹369, while Vedanta dropped 3.7% to…
Gold slipped to its lowest level in nearly two weeks on Monday after Warsh's comments raised concerns that the US Federal Reserve may need to raise interest rates to bring inflation under control. Escalating tensions in the Middle East further added to concerns about.
The weakness was also visible in domestic commodity markets. The decline in precious metals came amid aggressive profit-taking, weak global market cues, rising US bond yields and escalating tensions between the US and Iran.
What Happened
The conflict has pushed energy prices higher and raised concerns about another flare-up in inflation. On Friday, Warsh said the US central bank would “have work to do” if policymakers did not gain the confidence needed to ensure inflation was heading towards.
The Nifty Metal index also came under significant selling pressure, declining more than 2% in intraday trade amid a broader market sell-off.
Hindustan Zinc fell as much as 4.7% to its day's low of ₹592.05.
NALCO declined 3.8% to ₹369, while Vedanta dropped 3.7% to ₹276.50.
Key Details
Markets currently see a 57% chance of a rate hike at the Federal Reserve's next policy meeting in September, compared with 36% before Warsh's comments, according to the CME FedWatch tool. Inflation data also contributed to the concerns.
Hind Copper also declined 2.5% to ₹520.20 during the session.
Spot gold was down 0.3% at $4,439.31 per ounce at 0643 GMT, after touching its lowest level since August 19 earlier in the session.
Gold prices had already declined more than 3% on Friday.
Why It Matters
US Personal Consumption Expenditure (PCE) rose 3.7% year-on-year in July, indicating that inflation remained above the Federal Reserve's 2% target for the 65th consecutive month. Meanwhile, the US 10-year bond yield climbed to 4.74%, extending its rise for a fourth consecutive session.
US gold futures fell 0.9% to $4,489.50, while spot silver declined 0.5% to $66.68.
Gold and silver prices fell by up to 2% in morning trade on the Multi Commodity Exchange (MCX) on Monday, August 31, amid heavy profit-taking and weak global cues.
What Reports Say
Coverage of the story so far points to:
MCX gold October futures declined by more than ₹2,600, or nearly 2%, to ₹1,53,640 per 10 grams.
MCX silver September contracts plunged by over ₹4,200, or almost 2%, to ₹2,32,501 per kg in early trade.
Continued reporting by Livemint as more details emerge
