Gold prices declined on Wednesday to their lowest levels in over a week, weighed down by a firmer U.S. dollar and elevated Treasury yields. Investor sentiment took a hit following renewed tariff threats from former U.S. President Donald Trump, sparking uncertainty across global markets. The yellow metal’s drop reflects not only international developments but also domestic currency strength, which added pressure on Indian gold futures.
As of 06:24 GMT, spot gold was trading 0.4 percent lower at $3,286.96 per ounce, marking its weakest level since June 30. U.S. gold futures also fell, slipping 0.7 percent to $3,295. On the Multi Commodity Exchange (MCX), the August 5 gold contract was down 0.30 percent at ₹96,178 per 10 grams. The decline followed an overnight move in the U.S. dollar, which reached a two-week high, and yields on the 10-year U.S. Treasury notes, which hovered near a three-week peak.
Tariff Threats Fuel Market Jitters
The slide in gold prices comes amid fresh protectionist rhetoric from Trump, who has vowed to impose a 50 percent tariff on imported copper. In addition, he threatened to revive long-discussed duties on critical sectors including semiconductors and pharmaceuticals. On Tuesday, he reiterated his plans to slap 10 percent tariffs on imports from BRICS nations. This followed an earlier announcement to notify 14 countries, including Japan and South Korea, about tariff hikes set to take effect on August 1.
Such geopolitical and trade tensions have typically supported gold as a safe-haven asset. However, in this case, the immediate market response has been a move toward the dollar and U.S. Treasuries, sapping gold’s appeal in the short term.
Gold Outlook and Technical view
In the Indian market, the rupee’s appreciation also played a role in dragging down gold prices. According to Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities,the domestic weakness was amplified by a 0.23 percent rise in the rupee, which put further pressure on local bullion prices.
Trivedi noted that gold continues to face significant resistance in the $3,330–$3,350 zone, while $3,290 remains a key support level. In rupee terms, the resistance stands at ₹97,500 and support at ₹95,500. “This range-bound trend may witness a breakout on either side depending on upcoming U.S. trade developments or further tariff announcements,” he said.
The gold market is now awaiting crucial U.S. macroeconomic data, including Non-Farm Payrolls and unemployment figures, due later in the day. These data points are expected to offer clarity on the U.S. Federal Reserve’s monetary policy stance and could influence gold’s near-term trajectory. Trivedi added that volatility was likely to persist, with prices expected to fluctuate between ₹95,500 and ₹98,500 over the short term.
Despite the recent weakness, market experts remain positive on the medium-term outlook for gold. Sandip Raichura, CEO of Retail Broking and Distribution & Director at PL Capital, pointed out that central banks globally continue to buy gold at a robust pace—above 1,000 tons per annum—a trend unlikely to reverse in the near future. He also highlighted that inflation remains above the U.S. Federal Reserve’s comfort zone, which supports the case for higher gold prices.
“Gold has come down slightly after ceasefire announcements and stronger-than-expected U.S. economic data,” Raichura said. “However, the structural factors remain intact. We expect gold to trade in the $3,150–$3,500 range in the medium term and possibly breach $3,700 over the longer term.”
In conclusion, gold prices may be facing near-term headwinds from a strengthening dollar, rising bond yields, and tariff-induced uncertainty, but analysts believe the long-term fundamentals for the yellow metal remain solid. With central bank buying, persistent inflation, and geopolitical unpredictability continuing to support demand, the outlook remains bullish beyond the immediate volatility. For investors, the current dip could offer a buying opportunity—provided they stay alert to upcoming U.S. data releases and any escalation in global trade tensions.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
