Gold Prices Plunge Below ₹1.51 Lakh as US Dollar Strengthens

Gold prices in India fell below ₹1.51 lakh per 10 grams on September 2, due to a stronger US dollar and higher bond yields. The MCX gold futures dropped by 1.06%, while silver futures fell by 1.38%. According to Prithviraj Kothari, Managing Director at RiddiSiddhi Bullions and President of the India Bullion and Jewellers Association, gold dropped to a three-week low.

The current decline is linked to changing expectations around US interest rates, with markets pricing in about a 68% probability of a Federal Reserve rate hike this month. Higher interest rates and bond yields increase the opportunity cost of holding gold and silver, which do not generate interest income. Additionally, a stronger US dollar makes bullion more expensive for buyers using other currencies.

Piyush Jhunjhunwala, Founder & CEO, Stockify, said that gold is facing near-term pressure from rising crude oil prices, US Treasury yields and expectations of higher interest rates. However, inflation concerns and geopolitical tensions could continue to provide longer-term support to the metal.