Precious metals traded sideways on Friday (July 10) as a weaker US dollar supported gold prices, while rising oil prices and rate hike expectations kept gains in check. According to The Hindu BusinessLine, spot gold was up 0.2% at $4,128.92 per ounce, as of 0303 GMT, and headed for an over 1% weekly fall. US gold futures for August delivery were steady at $4,139.50. The dollar was at a one-week low, making greenback-priced bullion more affordable for holders of other currencies. As per KCM Trade's Tim Waterer, "Gold is in consolidation mode today following yesterday's gains, with traders hesitant to commit to further upside amid the prevailing uncertainty over US-Iran relations." Despite the subdued trading, gold has declined more than 1% over the past week, remaining on track for a weekly loss. Spot gold was trading at $4,066 per ounce, marking the fourth consecutive session of decline following recent geopolitical tensions. The decline followed fresh escalation in the US-Iran conflict, with the US military launched new strikes on Iran after US President Donald Trump said an interim agreement aimed at ending the conflict was no longer in effect. Tensions in West Asia flared up again after the US launched fresh strikes on Iran, saying the move was in response to Tehran's alleged attacks on ships transiting the Strait of Hormuz. Ahead of the strikes, Washington also revoked a licence that had authorised the sale of Iranian oil in international markets, with Iran reportedly resuming attacks by launching missiles at US military sites in Bahrain and Kuwait. As per CNBC TV18, the developments pushed oil prices higher, strengthened the dollar and raised concerns that inflation could remain elevated. In India, the benchmark MCX August gold futures contract was trading at ₹1.45 lakh per 10 grams, while the benchmark silver futures contract hovered around ₹2.22 lakh per kg, according to CNBC TV18.
The dollar's strength is creating headwinds for gold as investors await clarity on Federal Reserve monetary policy. According to ET Now, rate hike expectations remain elevated with markets pricing in approximately a 65% probability of a rate hike at the September FOMC meeting, with investors also expecting at least one additional rate increase in 2026. According to CNBC TV18, higher inflation expectations have also reinforced the possibility of tighter US monetary policy. Since gold does not earn interest, expectations of higher interest rates typically reduce its appeal compared with interest-bearing assets. According to The Economic Times, market expectations of a September rate hike have strengthened in recent sessions as rising oil prices and a firmer dollar fuel concerns over persistent inflation. Markets are now pricing in a 64% chance of a September rate hike from around 54% a week before, according to CME's FedWatch tool. Minutes of the Federal Reserve's June meeting, released earlier this week, showed growing concerns among policymakers about elevated inflation, with a few participants seeing a case for raising interest rates. According to The Hindu BusinessLine, minutes from the Fed's June meeting, released earlier this week, showed growing concerns among policymakers about elevated inflation. New York Fed President John Williams said on Thursday he did not expect energy prices to rise persistently for the rest of the year despite renewed hostilities in the Middle East. Market participants are also awaiting the release of minutes from the US Federal Reserve's June policy meeting and weekly US jobless claims data for further clues on the interest rate outlook. According to Motilal Oswal Financial Services, although softer US labour market data last week briefly reduced rate-hike expectations, the recent surge in oil prices has again fuelled concerns that inflation could remain elevated.
Rising oil prices are adding significant pressure on gold prices as WTI crude futures were up 4.7% for the week, while Brent crude futures gained 5.7% over the same period. According to ET Now, higher oil prices typically increase inflation expectations, which can encourage central banks to keep interest rates elevated for longer. Such an environment tends to weigh on gold prices because the precious metal does not offer any yield. The US Dollar Index (DXY), which measures the greenback against a basket of six major currencies, slipped 0.2% to 100.77 and was also on track for a modest weekly decline. A weaker dollar typically supports gold prices by making the metal more affordable for buyers using other currencies, thereby boosting global demand. Oil prices were on track for a weekly gain, as US and Iran continued to trade strikes, with Iranian armed forces launching attacks on US military infrastructure in Gulf states on Thursday following US strikes on Iran's southern coastal and eastern provinces. The latest round of strikes has fuelled inflation concerns and reinforced the probability of the US Federal Reserve raising interest rates this year. The outlook for gold also remained under pressure after the International Monetary Fund lowered its global growth forecast for 2026 to 3%, while Bank of America cut its average gold price forecast for 2026 by 14%, citing expectations of a more hawkish US Federal Reserve. HSBC cut its average gold price forecasts for 2026 and 2027 on Thursday, citing a hawkish shift in US monetary policy expectations and a stronger dollar. While gold is typically seen as a hedge against inflation, it loses its appeal as a non-yielding asset in a high-interest-rate environment.
Other precious metals also saw slight movements and are on track for weekly losses. According to The Hindu BusinessLine, spot silver rose 0.8% to $60.46 per ounce, platinum gained 1.6% to $1,636.68 and palladium added 1.6% to $1,267. All three metals were on track for a weekly loss, indicating broad-based weakness across the precious metals complex. The number of Americans filing new claims for unemployment benefits fell last week, suggesting the labor market remained stable despite a slowdown in job growth in June. The National Bank of Poland (NBP) has 632.4 tons of gold reserves worth about 308 billion zlotys ($81.68 billion), NBP Governor Adam Glapinski said on Thursday. Fortuna Mining expects to receive the final permit for its Diamba Sud gold project in Senegal within weeks, its chief executive told Reuters.
Industry experts expect gold prices to remain range-bound despite near-term volatility. Colin Shah, Managing Director of Kama Jewelry, said the yellow metal is reacting sharply to geopolitical risks after a historic rally earlier this year. He said crude oil prices, the strength of the US dollar and uncertainty surrounding the Federal Reserve's policy path will remain the key drivers of gold prices in the coming months. According to Shah, while ongoing peace efforts could gradually ease geopolitical tensions, gold remains highly sensitive to economic and geopolitical developments, with even minor triggers capable of causing sharp price swings. He expects prices to remain broadly range-bound during the second half of calendar year 2026. On the domestic front, he said the upcoming festive season is likely to support jewellery demand, although consumers may increasingly opt for smaller, purpose-led purchases instead of large-ticket buying as elevated prices continue to influence spending decisions. Pinky Yadav, Commodity Fundamental Analyst at Choice Broking, said both COMEX and MCX gold prices remain under pressure as investors balance geopolitical safe-haven demand against rising bond yields and a stronger dollar. She noted that markets remain focused on upcoming US economic data and further signals from the Federal Reserve, which are likely to determine the next direction for bullion. According to KCM Trade's Tim Waterer, "I expect gold will continue to attract buyers on dips as long as oil stays around current levels. However, any sharp spike in oil could reignite inflation and interest rate fears, which would be to gold's detriment."
