Gold futures tumble 2% as dollar strengthens further

Rising crude prices, geopolitical uncertainty and fading rate-cut hopes trigger heavy bullion selling across global markets

Gold futures declined sharply on Friday, falling nearly 2% in domestic trade as a stronger US dollar, elevated crude oil prices and fading expectations of interest rate cuts by the US Federal Reserve weakened investor sentiment toward bullion.

On the Multi Commodity Exchange (MCX), gold contracts for June delivery dropped ₹2,880, or 1.78%, to ₹1,59,098 per 10 grams in a turnover of 7,714 lots.

Analysts said rising geopolitical tensions in West Asia and higher global crude oil prices strengthened the dollar and US bond yields, reducing the appeal of non-yielding assets like gold. 

Crude oil prices remained elevated near USD 107 per barrel amid concerns over supply disruptions linked to the ongoing Iran conflict and uncertainty surrounding the Strait of Hormuz.

Gaurav Garg said gold prices remained under pressure due to fluctuations in investor sentiment caused by geopolitical developments and a stronger greenback.

Additional pressure on bullion prices came after the government imposed restrictions on gold holdings with a quantity limit of 100 kg, a move aimed at controlling reserves and managing the trade deficit. Globally, Comex gold futures for June delivery declined US$112.75, or 2.41%, to US$4,572.55 per ounce in New York trade. Manav Modi said gold prices extended losses for the fourth consecutive session as rising crude oil prices, stronger US yields and persistent geopolitical uncertainty weighed on market sentiment. Market participants also tracked ongoing negotiations between the US and Iran over Tehran’s nuclear programme and shipping access through the Strait of Hormuz. Investors were additionally monitoring talks between US President Donald Trump and Chinese President Xi Jinping for signals that could influence global financial markets.  

Market experts said investor focus has now shifted towards upcoming US inflation and employment data, which may offer fresh cues on the Federal Reserve’s future monetary policy stance. Higher inflation readings could delay possible rate cuts, strengthening the dollar further and putting additional pressure on bullion prices. 

Analysts also noted that elevated crude oil prices continue to increase global inflation concerns, reducing the attractiveness of gold as a safe-haven asset in the short term.