Gold heads south as dollar strengthens
Gold prices have crashed by ₹2,636 per 10 gm in past two weeks to ₹96,596 on Monday.
| Photo Credit:
ANGELIKA WARMUTH
The bearish trend in gold is expected to continue in the short-term as the dollar strengthened against major currencies including rupee.
Gold prices have crashed by ₹2,636 per 10 gm in past two weeks to ₹96,596 on Monday. The yellow metal was down by ₹387 per 10 gm on Monday as the rupee depreciated by 47 paise to close at 85.87 against dollar on back of foreign fund outflow and trade tariff uncertainties.
In global markets, it plunged to $3,300 an ounce from a record high of $3,500 an ounce in April. Despite the slide, expectations of the Federal Reserve rate cuts and growing US debt concerns could limit deeper losses.
However, the long-term trend remains firm on expectations of higher inflation in the US and central governments continuing to buy the yellow metal as part of their forex diversification.
Mixed demand
Suvankar Sen, MD & CEO, Senco Gold, said the demand for gold jewellery has been mixed with wedding purchases picking up while other customers who were waiting on the wall are yet to take the plunge as they expect prices to fall further.
The prices will be extremely volatile for next two months based on geopolitical situations and the possibility of US Fed cutting rates will push up prices again, he said.
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said the uncertainty over possible extension of the 90-day pause on the US trade tariff has been keeping gold prices under pressure.
Additionally, he said the upcoming US Fed meeting minutes may offer deeper insights into the central bank’s last policy stance, he said.
Cutting haven buys
Riya Singh – Research Analyst, Commodities and Currency, Emkay Global Financial Services, said the easing of geopolitical tensions, including a potential Israel-Hamas ceasefire and softened rhetoric around US-China trade, reduced the safe-haven demand for gold.
However, she said fresh tariff threats on BRICS nations and uncertainty surrounding the July 9 trade deadline have kept volatility alive. Despite gold closing near a six-week low, elevated investor positioning reflected in rising net-long futures and ETF inflows suggests underlying bullish sentiment, she said.
Prithviraj Kothari, Managing Director, RiddiSiddhi Bullions, said while a strengthening US dollar, rising bond yields and dampening geopolitical tensions are applying downward pressure, gold prices will gain from central bank buying, particularly from emerging economies such as China, India and Turkey.
Central banks are diversifying away from the dollar and building reserves as global conditions remain uncertain. However, this structural demand may not elicit outsized rallies for gold, it could soften price declines, he added.
Published on July 7, 2025
