Gold prices declined by Rs 612 to Rs 1,09,210 per 10 grams in Indian futures trading on Thursday after speculators cut positions following a strong rebound in the dollar after the US Federal Reserve's cautious approach diluted bullion's recent rally.
On the Multi Commodity Exchange (MCX), gold futures for delivery in October fell Rs 612, or 0.56 per cent, to Rs 1,09,210 per 10 grams. The December contract also fell Rs 566, or 0.51 per cent, settling at Rs 1,10,300 per 10 grams.
Silver prices also eased, with December delivery futures shedding Rs 604, or 0.48 per cent, to Rs 1,26,380 per kg, while the March 2026 contract declined Rs 630, or 0.49 per cent, to Rs 1,27,985 per kg.
The Federal Reserve released its first 25 basis point rate cut in 2025, in line with market sentiment. But the policy direction for 2026 was less dovish, with markets now expecting just one possible rate cut next year. This change in outlook put pressure on bullion prices, which had risen sharply over the past few weeks on speculative rate cut expectations and heightened geopolitical tensions," said Deveya Gaglani, Senior Research Analyst - Commodities, Axis Securities.
The Federal Reserve said on Wednesday that economic growth eased in the first half of the year, job growth decelerated, unemployment crept up, but inflation was somewhat higher.
"Given the change in the balance of risks, the Committee resolved to reduce the target range for the federal funds rate by 1/4 percentage point to 4-4.25 per cent," the US central bank further stated.
Analysts in the commodities market noted that the central bank has indicated two further cuts this year, which would be a support for gold in the medium term.
In international markets, December gold delivery futures lost USD 28.05, or 0.75 per cent, at USD 3,689.75 an ounce, after hitting a new high of USD 3,744 in the last session. Silver futures lost 1.05 per cent to USD 41.71 an ounce, from a 14-year high of USD 43.43 earlier during the week.
Fed Chairman Jerome Powell characterized the latest action as "risk management" amid weakness in the labor market, stressing that there is no hurry to ease. Newly elected Governor Stephen Miran dissented, calling for a bigger 50 basis point cut.
The dollar index, measuring the US currency against a basket of six major currencies, rose 0.35 per cent to 97.21, putting additional pressure on bullion prices.
The dollar index fluctuated around 97 on Thursday after rising sharply in the previous session, as investors recalculated the Federal Reserve policy perspective," wrote Jigar Trivedi, Reliance Securities Senior Research Analyst.
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