Gold drops as strong dollar wipes out rally
Gold futures retreated on Tuesday as traders locked in gains following a rally in the U.S. dollar and diminished prospects for further interest rate reductions by the Federal Reserve during the remainder of the year. December contracts on the Multi Commodity Exchange dropped 836 rupees, or 0.69 percent, to settle at 120,573 rupees per 10 grams, while the dollar index climbed 0.08 percent to reach 99.95.
Market watchers pointed to several factors undermining demand for the precious metal, such as a robust American currency, easing tensions between Washington and Beijing over trade matters, and lower odds of additional monetary policy loosening. Analysts observed that prices hovered near the $4,000 threshold as the greenback maintained strength at levels not seen in more than three months. A federal government shutdown has prevented the release of important economic indicators, leaving investors focused on purchasing manager surveys for the manufacturing and services sectors.
China recently eliminated a tax break for certain gold merchants, a move that could dampen buying activity in the world’s largest consumer market. Central banks worldwide accelerated their bullion acquisitions during the third quarter of calendar year 2025, increasing purchases by 28 percent from the previous three months.
