Mumbai: Gold prices dropped nearly 1 percent on Friday as investors turned cautious amid rising inflation concerns and uncertainty over global interest rates.
On the Multi Commodity Exchange (MCX), gold futures for August delivery fell by Rs 1,221 to Rs 1,58,326 per 10 grams. The contract witnessed a business turnover of 8,346 lots during the session.
The decline came despite continued geopolitical tensions in West Asia, which usually support safe-haven assets such as gold.
Oil Prices and Inflation Worries Hurt Sentiment
Market experts said rising crude oil prices and concerns over supply disruptions through the Strait of Hormuz are increasing fears of higher inflation across major economies.
Higher inflation often forces central banks to keep interest rates elevated for longer periods. Since gold does not provide interest income, higher rates reduce its attractiveness compared with other financial assets.
According to Pinky Yadav, Commodity Fundamental Analyst at Choice Broking, investors remain focused on how ongoing Middle East tensions could impact inflation and future monetary policy decisions.
Strong Dollar Adds More Pressure
The US Dollar Index remained firm near 99.4, supported by safe-haven demand.
A stronger dollar generally makes gold more expensive for buyers holding other currencies, reducing demand and putting pressure on prices.
In international markets, Comex gold futures for August delivery slipped by USD 16.63, or 0.37 percent, to USD 4,488.37 per ounce.
Geopolitical Developments Keep Markets Alert
Investors are closely monitoring developments involving Iran, Israel and Lebanon.
US President Donald Trump indicated that negotiations with Iran were nearing a final stage, while Iran stated that significant progress had not been achieved. At the same time, military tensions in the region continue, keeping global markets on edge.
Focus Shifts to US Jobs Data and RBI Outlook
Market participants are now awaiting the US non-farm payrolls report, which could provide clues about the Federal Reserve’s next interest-rate decision.
On the domestic front, the RBI raised its FY27 inflation forecast to 5.1 percent from 4.6 percent, citing higher energy costs. The central bank also lowered its GDP growth estimate to 6.6 percent, highlighting concerns over slowing economic momentum.
The combination of inflation worries, a stronger dollar and expectations of tighter monetary policy continues to weigh on gold prices in the near term.
