Indian Gold Prices Under Pressure from Strong Dollar and Rising Yields

The recent decline in gold prices in India is linked to movements in the international bullion market. Spot gold fell 0.9% to $4,140.06 an ounce on October 2, with a weekly decline of about 3.4%. A stronger US dollar and elevated US Treasury yields are important pressures on bullion.

The dollar's strength weighs on gold because the metal is globally priced in dollars, reducing demand for dollar-denominated gold among buyers using other currencies. The domestic price also depends on the rupee-dollar exchange rate, import-related costs, and local market conditions.

US Treasury yields have remained elevated, reaching their highest levels since 2002. Higher yields can reduce the relative appeal of gold because bullion does not generate regular interest income. The Federal Reserve's interest-rate outlook is another major driver for gold, with recent US economic data producing mixed signals.