Domestic gold futures climbed on Wednesday morning, buoyed by a weakening US dollar and growing fiscal uncertainty in the world’s largest economy. At around 9:15 AM, gold futures for June 5 delivery on the Multi Commodity Exchange (MCX) were trading 0.66% higher at ₹95,470 per 10 grams.
The decline in the US dollar—slipping below the 100 mark—has made gold more affordable in other currencies, thereby boosting global demand. Since gold is denominated in US dollars, any weakness in the greenback typically supports bullion prices by making it cheaper for holders of other currencies.
Mounting concerns over the health of the US economy have added further pressure on the dollar. Analysts point to the recent tax cut bill, which has stoked fears of a faster-than-anticipated expansion of the US budget deficit. Additionally, credit rating agency Moody’s downgraded the US sovereign rating last Friday, further fueling investor anxiety.
Gold prices have rebounded after recent bouts of profit-taking. In the previous session, MCX Gold June futures surged 1.65%.
“Gold and silver extended their gains on increased safe-haven buying, triggered by Moody’s downgrade of US credit ratings amid rising federal debt levels,” said Manoj Kumar Jain, analyst at Prithvifinmart Commodity Research. He added that the dollar index continued to slide and global equity markets fell in response to the downgrade, lending further support to precious metals.
International monetary policy developments have also impacted gold sentiment. On Tuesday, the People’s Bank of China cut its one-year and five-year loan prime rates by 10 basis points, while the Reserve Bank of Australia lowered its key interest rate by 25 basis points—moves that often favor non-yielding assets like gold.
Experts suggest that while gold prices may remain range-bound in the near term, robust underlying demand could limit downside risks.
“Demand remains strong. China imported its highest volume of gold in nearly a year last month, despite record prices. Continued buying from global central banks and steady seasonal demand in India during the wedding season are expected to keep prices supported,” said Aksha Kamboj, Vice President of the India Bullion and Jewellers Association and Executive Chairperson of Aspect Global Ventures. “However, in the absence of a clear catalyst, gold prices are likely to consolidate with intermittent volatility.”
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