Gold Dips 1% as Strong Dollar and Yields Weigh on Recovery

Gold prices dropped nearly 1% in futures trading on Monday, falling to Rs 1.49 lakh per 10 grams due to a strong US dollar and elevated Treasury yields. The decline came despite weak US jobs data, which typically supports gold as a safe-haven asset. The yellow metal had already lost 2% in the previous week, ending at Rs 1.5 lakh per 10 grams.

Analysts noted that the dollar index hovering near an 18-month high of 102.37 is exerting pressure on gold prices. Globally, Comex gold futures for December delivery traded slightly higher at USD 1,963.50 per ounce, though the metal remains caught between cooling labor conditions and persistent yield and dollar pressures.

Investors are closely monitoring economic data, including the Services PMI from major economies, US trade figures, and mid-month consumer sentiment data. Geopolitical tensions, particularly the unresolved US-Iran situation, could also introduce volatility in precious metals markets.

Despite a weak US jobs report reducing October rate hike expectations to below 20%, a nearly 70% chance of a December hike is still priced in. Elevated US Treasury yields, holding around 5.2%, are further constraining gold's recovery.