Gold futures on the Multi Commodity Exchange (MCX) rebounded to Rs 1.42 lakh per 10 grams on Tuesday after witnessing early losses, tracking a recovery in international markets. The contract had briefly slipped below the psychologically significant $4,000 per ounce mark in overseas trade, hitting its lowest level in nearly eight months, before staging a comeback to around $4,040 per ounce.
Market Movements
According to data from the MCX, the gold futures contract for delivery in August 2026 traded at Rs 1,42,050 per 10 grams during the afternoon session, recovering from an intraday low of Rs 1,41,200. The initial decline was attributed to a stronger US dollar and rising bond yields, which weighed on the precious metal's appeal as an alternative investment.
In the international market, spot gold prices fell to $3,985 per ounce earlier in the day, marking the lowest level since November 2025. However, bargain buying and short-covering helped prices recover to the $4,040 level by the time of reporting. Analysts noted that the $4,000 mark acted as a strong psychological support.
Reasons Behind the Volatility
The sharp intraday volatility was driven by a mix of macroeconomic factors. The US dollar index, which measures the greenback against a basket of six major currencies, rose 0.3% in early trade, making gold more expensive for holders of other currencies. Additionally, the yield on the 10-year US Treasury note climbed to 4.25%, increasing the opportunity cost of holding non-yielding assets like gold.
Market participants also cited profit-booking after a recent rally. Gold had gained nearly 8% in the previous two weeks on expectations of a slowdown in US interest rate hikes. However, hawkish comments from Federal Reserve officials last week dampened those hopes, triggering a sell-off.
Impact on Indian Markets
In India, the world's second-largest gold consumer, the price recovery provided some relief to jewellers and investors. The domestic price is influenced by the international rate, import duties, and rupee-dollar exchange rate. The rupee weakened slightly to 83.50 against the US dollar, limiting the upside for gold prices.
According to a senior analyst at Motilal Oswal Financial Services, “The correction in gold prices was overdue after the recent rally. The recovery from $4,000 suggests strong support at that level. However, further gains may be capped unless there is a clear dovish shift from the Fed.”
Outlook
Traders are now awaiting key US economic data, including non-farm payrolls and inflation figures, due later this week. These data points could provide further cues on the Fed’s monetary policy path. A weaker-than-expected jobs report could reignite gold’s rally, while strong data may push prices lower.
On the MCX, gold futures for October delivery also traded higher at Rs 1,43,000 per 10 grams. Silver futures, meanwhile, rose 1.2% to Rs 84,500 per kilogram, tracking gold's recovery.
