Gold fell by nearly 1% or over Rs 1,000 to Rs 1,43,439 on Friday as Brent Crude headed for another weekly gain amid the ongoing Iran war.
Gold futures saw a sharp correction on Thursday, falling over Rs 3,500 per 10 grams, as a stronger US dollar and a hawkish Federal Reserve outlook dampened investor sentiment. The decline also extended to silver, which continued its losing streak amid broad-based selling in precious metals.
Gold hit intraday low on the MCX around 8 p.m., falling to Rs 1,43,385. Silver, meanwhile, fell over 2%, or over Rs 4,860, to Rs 2,23,305 at 8:17 pm.
Global Cues Drag Bullion Lower
Weakness in domestic prices mirrored global trends. On the Comex, gold futures fell nearly 2% to around $4,573.33 per ounce, while silver prices dropped more than 2%.
The primary trigger for the selloff has been the US Federal Reserve's latest policy stance. The Fed kept interest rates unchanged but signalled limited room for rate cuts this year, with policymakers indicating that inflation remains a concern.
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Higher interest rates tend to weigh on gold, as the metal does not offer any yield, making it less attractive compared to interest-bearing assets. The stronger dollar has further added pressure, as it makes gold more expensive for global buyers.
War-Driven Volatility
While geopolitical tensions in the Middle East have typically supported gold prices, the current environment has seen a shift in safe-haven flows toward the US dollar instead. Rising oil prices and uncertainty around inflation have reinforced expectations that rates could stay higher for longer.
Analysts also point to some investors selling gold to meet margin calls in other asset classes, adding to the downward pressure. Despite the recent correction, gold remains up over 10% so far this year, although momentum has clearly weakened. With rate cut expectations fading and global uncertainty persisting, bullion could remain volatile in the near term.
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