Gold Prices Reach Three-Month High Amid Weaker Dollar

Gold prices in India surged to a three-month peak on Friday, marking a continuation of gains over the previous two sessions. Local traders reported that gold with 99.9 per cent purity increased by Rs 1,200, reaching Rs 1,63,500 per 10 grams, after closing at Rs 1,62,300 the day before. This is the highest recorded level since May 19, when the price reached Rs 1,63,600 per 10 grams.

Analysts attribute this upward trend to a weaker US dollar and strong global market conditions, with Gaurav Garg, Head of Research at Lemonn Markets Desk, stating, "Gold extended its rally on Friday's session and is heading for its third consecutive weekly gain, while silver also remained strong, supported by a weaker US dollar and falling longer-term Treasury bond yields."

In international markets, gold spot prices rose by USD 81.58, or 2 per cent, reaching USD 4,600.91 per ounce, the highest since May 2026. Saumil Gandhi, Senior Analyst - Commodities at HDFC Securities, noted, "Spot gold surged to around USD 4,600 an ounce, and remains on track for a third consecutive weekly gain."

The rise in gold prices comes amid strong investment demand and increased volatility in currency and bond markets. Analysts indicated that this week, gold gained more than 4 per cent, influenced by expanded US Treasury bond buybacks, which have triggered a decline in both the dollar and long-term bond yields.

Praveen Singh, Head of Commodities at Mirae Asset Sharekhan, explained that the US Treasury Department's recent decision to double its long-term debt buybacks aimed at reducing borrowing costs has aided in bolstering gold prices. Although yields have stabilised, gold has managed to maintain most of its gains. Singh added that a slight retreat in international oil prices also contributed to the support for bullion.

As market participants await key macroeconomic data from the United States, including Purchasing Managers' Index (PMI) figures, uncertainties regarding Federal Reserve monetary policy continue to loom. Ongoing geopolitical tensions, particularly surrounding economic sanctions on Iran by the Trump administration, have also added to the market complexities.

The dollar index, a key measure of the value of the US dollar against a basket of currencies, fell nearly 0.9 per cent for the week, now sitting at 98.74, having reached a three-month low. This decline has further enhanced gold's appeal to holders of other currencies, with many investors turning to the precious metal as a hedge against potential erosion of purchasing power due to escalating US debt.

Jonas Goltermann, chief markets economist at Capital Economics, remarked, "The dollar has come under renewed pressure, in part due to a resurgent 'debasement' narrative." This sentiment has encouraged investors to seek out gold, particularly as inflationary pressures and fiscal concerns persist, highlighting the asset's value during times of uncertainty.

In summary, gold and silver prices in India are experiencing significant increases, driven by external market factors and changes in investment behaviour. Industry professionals remain vigilant as they anticipate further developments in the macroeconomic landscape that could influence the trajectory of precious metal prices.