Gold futures fell Rs 1,834 to hit a three-month low of Rs 1.44 lakh per 10 grams on Wednesday amid a rally in the greenback and growing expectations for elevated US interest rates kept investors away from precious metals.
On the Multi Commodity Exchange, the yellow metal for August delivery decreased by Rs 1,834, or 1.25 per cent, to Rs 1,44,695 per 10 grams in a business turnover of 9,508 lots.
The precious metal was last seen around these levels on March 23, when it settled at Rs 1,45,069 per 10 grams.
Analysts said domestic markets remained under pressure as traders increasingly priced in a tighter US monetary policy path, boosting the dollar and Treasury bond yields.
"Gold prices fell in the domestic market amid a strengthening in the US dollar and prevailing concerns over the Federal Reserve's policies, which have dampened the demand for bullion," Gaurav Garg, Research Analyst at Lemonn Markets Desk, said.
Meanwhile, gold futures slipped below USD 4,100 per ounce for the first time in nearly eight months in international markets. The metal dropped by USD 51.55, or 1.24 per cent, to USD 4,097.85 per ounce on the Comex.
It had last quoted near these levels on October 28, 2025 when it was traded at USD 4,100.6 per ounce.
According to analysts, a combination of global factors has accelerated the selloff in the precious metals.
"Gold prices in the global markets are extending their losing streak despite a temporary US-Iran peace deal, pressured by three concurrent forces," Renisha Chainani, Head of Research at Augmont, said.
A broad risk-off wave triggered by a sharp correction in AI-linked stocks has spilling over into precious metals, while increasingly hawkish signals from the Federal Reserve have pushed the probability of a December 2026 rate hike to 86 per cent.
The stronger rate outlook has lifted the dollar index above the 101-mark, further weighing on bullion prices.
Meanwhile, uncertainty continues to linger over the durability of the US-Iran understanding reached earlier this week.
US President Donald Trump on Tuesday said Iran had agreed to indefinite nuclear inspections, though Tehran quickly disputed the claim, raising fresh questions about the future of the agreement.
Market participants are now awaiting the US Personal Consumption Expenditures (PCE) numbers, the Federal Reserve's preferred inflation gauge, due on Thursday for further clues on the trajectory of the monetary policy path and bullion prices, Chainani added.
