Gold futures declined on Wednesday, extending losses as weak domestic demand and a stronger US dollar weighed on sentiment. On the Multi Commodity Exchange (MCX), gold contracts for June delivery fell by Rs 1,005, or 0.63%, to Rs 1,58,011 per 10 grams. The contract had earlier touched an intraday low of Rs 1,57,900.
Factors Behind the Decline
Market analysts attributed the drop to subdued demand from local jewellers and retailers amid a lack of fresh triggers. Additionally, a firmer dollar index dampened the appeal of the yellow metal as an alternative investment. The dollar index edged higher against major currencies, making gold more expensive for holders of other currencies.
Global Cues Weigh on Sentiment
Globally, gold prices also traded lower on Wednesday. Spot gold slipped 0.4% to $2,335.79 per ounce, while US gold futures eased 0.3% to $2,340.20. The decline was in line with weaker trends in other commodities, as concerns over demand from top consumer China persisted. Investors are now awaiting US consumer price data later this week for further direction on interest rates.
Technical analysts noted that gold has been consolidating in a range, but a breach of key support at Rs 1,57,500 could trigger further selling. On the upside, resistance is seen at Rs 1,59,000.
Outlook
In the near term, gold prices are likely to remain under pressure amid a stronger dollar and uncertainty over US monetary policy. However, geopolitical tensions and central bank buying may provide some support. The MCX gold contract is expected to trade in a range of Rs 1,57,000 to Rs 1,59,500 in the coming sessions.
