Gold prices in India experienced another volatile day. The 24-carat gold fell by ₹440 on Wednesday, August 7. The price now stands at ₹69,270 per 10 grams.

Globally too, gold prices edged lower.

The strengthening of the US dollar and Treasury yields contributed to this decline.

As of 0310 GMT, spot gold slipped 0.2% to $2,385.60 per ounce, while US gold futures fell 0.3% to $2,425.30, according to news agency Reuters.

“A rebound in US Treasury yields and a firmer dollar have put downward pressure on gold prices. The resilience in US economic data is prompting a reassessment of market recession concerns,” IG market strategist Yeap Jun Rong was quoted as saying in the Reuters report.

However, Yeap noted that ongoing Middle East tensions and global recession worries may limit further declines in gold prices.

The dollar index rose to 103.25, making gold more expensive for overseas buyers.

Traders have adjusted their expectations for interest rate cuts, with nearly 105 basis points of cuts anticipated by year-end.

A 65% chance of the Federal Reserve cutting rates by 50 basis points in September is now factored in, compared to 85% the previous day.

In geopolitical news, US Secretary of State Antony Blinken urged Iran and Israel to avoid escalating the conflict in the Middle East, while the Pentagon warned against attacks on its forces in the region.

Rahul Kalantri, Vice-President (Commodities) at Mehta Equities, explained, “The dollar index showed significant volatility, recovering from eight-month lows. This, combined with profit-taking in the Japanese Yen, has kept precious metal prices lower.”

Despite this, Kalantri noted that rising tensions in the Middle East are providing some support to gold prices at lower levels.

Renisha Chainani, Head of Research at Augmont, pointed out that gold and silver prices have rebounded modestly after a sharp selloff earlier in the week.

She noted that recent US macro data showed a larger-than-expected contraction in the manufacturing sector and slower job growth, raising concerns about a potential US recession.

Chainani highlighted that these factors, along with expectations of a more aggressive policy easing by the Federal Reserve, are likely to support gold prices from falling further.

Investment outlook

Investors should remain cautious but optimistic.

The current market environment presents both challenges and opportunities for gold investments.

The ongoing geopolitical tensions and potential policy changes by the Federal Reserve may continue to influence gold prices.

As always, it’s essential to stay informed about global economic developments and adjust investment strategies accordingly.