Bullion futures extend losses as Fed outlook turns hawkish

Gold and silver futures extended their losses on Friday as expectations of further US Federal Reserve interest rate hikes, coupled with a stronger US dollar, weighed on investor sentiment. Market participants are now focusing on next week's US inflation data, which could provide fresh guidance on the central bank's monetary policy path.

   On the MCX, gold futures for August delivery fell 0.7% to ₹1,44,275 per 10 grams, while the September silver contract declined 1.3% to ₹2,23,550 per kilogram. In the international market, COMEX gold futures for August delivery slipped 0.6% to $4,117.8 an ounce, while September silver eased 1.2% to $59.99 an ounce.

  Analysts said the inability of domestic gold futures to sustain levels above ₹1,45,000 triggered fresh selling. Strength in the US dollar further reduced the appeal of non-yielding assets such as gold, while expectations of tighter monetary policy continued to pressure precious metals. According to Jateen Trivedi, Vice-President and Research Analyst, Commodity and Currency, at LKP Securities, gold prices remained under pressure as weakness in international bullion markets, supported by a firm US dollar and lingering uncertainty surrounding renewed US-Iran tensions, kept investors cautious. 

   He noted that while geopolitical risks continue to provide intermittent support, the stronger dollar has limited any meaningful upside in gold prices.  Investor sentiment was also shaped by the minutes of the FOMC’s June policy meeting.  The minutes showed policymakers remained divided on the future direction of interest rates, with some favouring additional rate hikes while others supported easing.  

  The committee reiterated that future policy decisions would depend on incoming economic data. The CME FedWatch Tool indicates that nearly 49% of market participants now expect a 25-basis-point interest rate hike at the Fed's September meeting, compared with 46% a week earlier and 33% a month ago, reflecting a gradual shift towards a more hawkish outlook. 

—Agencies