Gold futures slide as crude rally strengthens dollar, hits demand

Gold futures witnessed a sharp decline on Wednesday, extending losses for the third consecutive session as rising crude oil prices and a stronger US dollar reduced the appeal of the precious metal. 

  Renewed geopolitical tensions in West Asia, following fresh US strikes on Iran, fuelled concerns over higher inflation and delayed interest rate cuts, prompting investors to trim their exposure to bullion.

  On the MCX, gold contracts for August delivery fell by ₹2,308, or 1.59%, to settle at ₹1,43,084 per 10 grams. The contract recorded a business turnover of 10,440 lots, reflecting active participation despite the sharp price correction.

   Market analysts said the surge in global crude oil prices has strengthened the US dollar by raising inflation expectations, making gold less attractive as an investment. 

  A stronger dollar increases the cost of gold for buyers holding other currencies, often leading to lower global demand. According to Gaurav Garg, Research Analyst at Lemonn Markets Desk, gold prices weakened in domestic markets as concerns over possible supply disruptions through the Strait of Hormuz lifted crude oil prices and supported the US dollar. The stronger greenback, coupled with geopolitical uncertainty, weighed heavily on bullion prices.

   Aamir Makda, Commodity and Currency Analyst at Choice Broking, said gold has now declined for three straight sessions as investors worry that higher oil prices could keep inflation elevated and delay monetary easing by the US Federal Reserve.

  Internationally, Comex gold futures for August delivery dropped USD 94.69, or 2.28%, to USD 4,062.71 per ounce in New York. Investors also remained cautious ahead of the release of the US Federal Reserve's June policy meeting minutes, which could provide fresh signals on the future path of interest rates.

  Although recent weaker US economic data have strengthened expectations of eventual rate cuts, analysts said profit booking and the stronger dollar have continued to pressure precious metals .

 Silver futures also ended lower in the domestic market. On the MCX, September silver contracts declined by ₹1,062, or 0.46%, to ₹2,29,795 per kilogram with a turnover of 846 lots.  However, in overseas markets, silver traded 1.35% higher at USD 60.78 per ounce in New York, reflecting mixed global sentiment towards industrial and precious metals. 

—PTI