Gold prices dropped sharply during the week as a firm US dollar and robust inflation figures from the United States heightened speculation that the Federal Reserve will raise interest rates again this year. The drop was reflected in futures trading, with MCX gold June contracts falling, while silver futures also retreated.
Data showed that year-on-year US personal consumption expenditures climbed at their fastest rate since May 2023, intensifying market anticipation of tighter US monetary policy. Investors are increasingly favoring yield-bearing assets over traditional safe havens like gold amid these developments. Meanwhile, the dollar index edged higher, reinforcing the downward pressure on precious metals.
The domestic market mirrored these global trends. The price of 24-carat gold per 10 grams declined notably from the start to the end of the trading week according to the India Bullion and Jewellers Association. Technical analysts identified key price levels where gold might encounter resistance or support, suggesting cautious market sentiment continues amid ongoing uncertainty about monetary policy direction.
Higher energy costs also contribute to inflationary pressures, further increasing the likelihood of Federal Reserve tightening measures. Minutes from recent Fed meetings indicated that more policymakers support potential upcoming rate hikes. This environment challenges gold’s attractiveness, as higher yields on alternative investments draw attention away from non-yielding assets.
On the COMEX market, gold has been consolidating within a defined price range, with immediate resistance and support levels closely monitored by traders. Similarly, MCX gold futures have identified resistance zones above Rs 1,60,000 and support near Rs 1,52,000–Rs 1,54,000, signaling a market in wait-and-see mode as policy expectations drive price action.