Gold Prices Dip Amid Rising Dollar and Higher Interest Rates
Gold prices on the Multi Commodity Exchange (MCX) dipped by Rs 1,900 per 10 grams, while silver prices rose by Rs 1,400 per kilogram. This mixed performance is attributed to investors assessing the possibility of major central banks keeping interest rates higher for longer to combat persistent inflation.
The dollar remained near a two-month high, putting pressure on bullion priced in US currency and making it more expensive for buyers holding other currencies. Higher interest rates can reduce gold's attractiveness as a hedge against inflation, as they increase returns available from interest-bearing assets.
US President Donald Trump has warned that he could annihilate Iran if an agreement to end the war is not reached. The Federal Reserve raised its benchmark interest rate by 25 basis points last week and indicated another hike could come before the end of the year. The Bank of Japan and European Central Bank have also recently raised interest rates.