Gold Drops Nearly 1% as Strong Dollar Pressures Prices

Gold prices in India dropped nearly 1% on Monday, falling to Rs 1.49 lakh per 10 grams on the Multi Commodity Exchange (MCX). The decline came as a stronger US dollar weighed on bullion recovery, with December delivery futures sliding Rs 1,020 to Rs 1,49,370 per 10 grams. The yellow metal had already lost Rs 2,887, or 2%, in the previous week, ending at Rs 1.5 lakh per 10 grams.

Analysts noted that gold has been stuck in a consolidating phase due to a stronger US dollar and elevated bond yields. Kaveri More, Commodity Technical Analyst at Choice Broking, highlighted that the dollar index near an 18-month high of 102.37 was putting pressure on bullion prices.

Globally, Comex gold futures for December delivery traded slightly higher at USD 4,163.50 per ounce in New York. Akshat Siddhant, Lead Quant Analyst at Mudrex, mentioned that gold remained above USD 4,150 per ounce after briefly crossing USD 4,200 on Friday, supported by a weak US jobs report. However, investors still see a nearly 70% chance of a December interest rate hike by the Federal Reserve.

Last week, international gold prices fell USD 158.9, or 3.7%, to close at USD 4,162.3 per ounce, while silver dropped USD 4.38, or 6.7%, to USD 60.41 per ounce. Manav Modi, Commodities Analyst at Motilal Oswal Financial Services Ltd, pointed out that elevated US Treasury yields, around 5.2%, were constraining bullion’s recovery due to persistent inflation and fiscal concerns.

Analysts are also watching key economic data, including Services PMI figures, US trade data, and mid-month consumer sentiment reports, for further market cues. The ongoing US-Iran situation could add to volatility in precious metals.