New Delhi: Gold prices rallied in international markets as declining US Treasury yields and a selloff in artificial intelligence (AI)-related stocks encouraged investors to seek safer assets amid growing uncertainty in global financial markets.
According to market reports published on October 15, spot gold rose by more than 1%, reaching around US$4,153 per troy ounce, while US gold futures also recorded gains. The rally helped bullion recover much of its previous session’s losses as investors shifted towards assets traditionally viewed as safe havens.
The recovery came amid renewed concerns about the sustainability of heavy investments in AI infrastructure. Technology stocks, particularly semiconductor companies, faced selling pressure as investors questioned whether the enormous spending on AI computing capacity would generate sufficient returns.
The resulting uncertainty encouraged investors to reduce exposure to riskier assets and increase their holdings of government bonds and precious metals.
Falling US Treasury Yields Support Gold Prices
One of the key factors behind gold’s rally was the decline in US Treasury yields. Gold does not pay interest, so it often becomes more attractive when yields on interest-bearing assets fall, reducing the opportunity cost of holding the precious metal.
The benchmark 10-year US Treasury yield dropped to a three-week low during Thursday’s trading, while the US dollar weakened by around 0.5%. These developments provided additional support to bullion prices.
However, inflation remains a major concern. Recent US consumer and producer price data showed stronger price pressures, keeping uncertainty alive over the Federal Reserve’s future interest-rate decisions. Higher interest rates for an extended period could limit further gains in gold.
AI Stock Selloff Triggers Flight to Safety
The recent decline in AI-related shares has raised questions about the profitability and financing of the technology industry’s rapid expansion. Concerns about debt-heavy investments in AI computing infrastructure have weighed on investor sentiment, prompting a shift towards government bonds and other defensive assets.
The technology selloff has also affected global equity markets, with semiconductor-heavy markets experiencing significant volatility. Investors are increasingly assessing whether the potential earnings from AI investments can justify the substantial capital being committed to the sector.
This shift in sentiment has strengthened demand for traditional safe-haven assets, including gold. Nevertheless, gold prices can remain volatile as traders react to changing inflation expectations, interest rates, currency movements and geopolitical developments.
What Lies Ahead for Gold Prices?
Market participants will closely monitor upcoming US economic data and Federal Reserve commentary for clues about the future direction of interest rates. A sustained decline in Treasury yields and continued demand for safe-haven assets could support gold prices further.
On the other hand, renewed strength in the US dollar, rising bond yields or easing concerns about technology stocks could reduce some of the upward pressure on bullion.
For Indian buyers, international gold prices and movements in the rupee-dollar exchange rate are important factors influencing domestic prices. Import duties, taxes and local market premiums also affect the final price of gold in India.
The latest rally highlights gold’s continuing role as a portfolio diversifier during periods of financial uncertainty, although price fluctuations remain a key risk for investors.