Gold Futures Slide Nearly 2% as Dollar Rally Dims Bullion Demand

Gold prices declined by Rs 2,880 to Rs 1.59 lakh per 10 grams in futures trade on Friday as a firm US dollar, elevated crude oil prices and fading expectations of interest rate cuts by the Federal Reserve weighed on investors' sentiment.

On the Multi Commodity Exchange, the yellow metal for June delivery depreciated by Rs 2,880, or 1.78 per cent, to Rs 1,59,098 per 10 grams in a business turnover of 7,714 lots.

Gold prices fell on Friday due to a stronger dollar and ongoing geopolitical tensions, particularly around Iran, which have led to fluctuations in market sentiment, Gaurav Garg, Research Analyst at Lemonn Markets Desk, said.

Crude oil prices remained elevated near USD 107 per barrel in the international markets amid concerns over potential supply disruptions linked to the West Asia conflict and continued uncertainty around the Strait of Hormuz, he added.

According to analysts, additional pressure came after the government's decision on Thursday to impose restrictions on gold with a quantity limit of 100 kgs, one more policy aimed to control the deficit and reserves, also impacting demand and weighing on prices.

The decline mirrored weakness in global markets, where Comex gold futures for the June contract declined by USD 112.75, or 2.41 per cent, to USD 4,572.55 per ounce in New York.

Gold prices extended losses for the fourth straight day in overseas trade, as rising oil prices, a stronger dollar and US Yields, weighed on sentiment following reports of a vessel seizure and another ship sinking, Manav Modi, Commodities Analyst, Motilal Oswal Financial Services Ltd, said.

A series of inflation reports released this week also reinforced concerns that higher energy prices could spread into broader goods and services inflation, further reducing hopes for near-term Federal Reserve rate cuts.

Analysts said markets also monitored developments in US and Iran negotiations, which remained deadlocked over Tehran's nuclear programme and the future of shipping access through the Strait of Hormuz.

At the same time, President Donald Trump and his Chinese counterpart Xi Jinping are holding a second day of talks in Beijing focused on trade, artificial intelligence, Taiwan and the Iran conflict, with investors watching for any signals that could influence global markets.