Gold futures on the Multi Commodity Exchange (MCX) witnessed a decline on Tuesday, dropping by 0.55 percent to settle at Rs 152,530 per 10 grams. The fall was attributed to a strengthening US dollar and an uptick in global bond yields, which reduced the appeal of the yellow metal as an investment.
Market Overview
The most actively traded gold contract for February delivery slipped by Rs 840, or 0.55 percent, from the previous close. The decline was in line with global trends, where spot gold edged lower in international markets. Meanwhile, silver futures also faced selling pressure, with the March contract declining by 1.2 percent to Rs 71,200 per kilogram.
Factors Influencing Gold Prices
Analysts pointed to several factors behind the bearish sentiment in gold. The US dollar index rose to a two-week high, making dollar-denominated commodities more expensive for holders of other currencies. Additionally, rising US Treasury yields increased the opportunity cost of holding non-yielding assets like gold.
Market participants are also closely watching the upcoming US Federal Reserve meeting for cues on interest rate policy. A hawkish stance could further weigh on gold prices.
Domestic and Global Outlook
In the domestic market, physical gold demand remained subdued as elevated prices deterred buyers. However, the onset of the wedding season in India could provide some support to prices in the near term. Globally, geopolitical tensions and central bank buying may limit the downside for gold.
According to experts, gold is likely to trade in a range of Rs 151,000 to Rs 154,000 per 10 grams in the short term, with a bias towards the lower side if the dollar continues to strengthen.
Silver prices also mirrored the weakness, with the metal falling below the crucial Rs 72,000 mark. Industrial demand concerns and a stronger dollar weighed on silver's outlook.
