Gold hits historic high at ₹1.02 lakh, but retreats on strong dollar and policy signals

After rallying to a historic high of ₹1,02,415 per 10 grams in Ahmedabad Thursday, gold lost steam as prices slipped to week’s lows amid profit booking and a strengthening dollar. The day’s highs were driven by global uncertainties following escalating conflict between Israel and Iran, after which investors were seen moving towards safe-haven assets.

On the Multi Commodity Exchange (MCX), gold futures settled at ₹99,329 per 10 grams on Thursday. Despite the pullback, investor demand remained firm, supported by deepening geopolitical tensions and currency volatility.

As geopolitical tensions show signs of temporary easing, gold is trading near a week's low of $3,365 per ounce, according to Kotak Securities Commodity Research.

Globally, gold hovered around $3,357.34 an ounce. The metal has been volatile this week, with initial support from the escalating Middle East conflict offset by a stronger dollar and reduced hopes of aggressive interest rate cuts by the U.S. Federal Reserve.

"The decline came as investors booked profits in bullion to cover losses in other asset classes. Geopolitical tensions, especially the growing conflict between Israel and Iran, continue to drive safe-haven buying. Domestically, a weaker rupee is also keeping gold and silver prices elevated," said Rahul Kalantri, VP-commodities, Mehta Equities Ltd.

According to Kotak Securities, COMEX Gold August futures dropped on Thursday, closing near $3,387 an ounce. COMEX Silver also declined by more than 1% to settle at $36.36 amid thin holiday trading and a week’s high in the dollar index.

The Israel-Iran conflict, entering its seventh day, has escalated sharply. The Israel Defense Forces (IDF) have called for mass evacuations in central Iran, hinting at broader military operations. Israel has reportedly struck Iranian nuclear facilities, while Iran retaliated with missile and drone strikes, including a direct attack on an Israeli hospital overnight. The situation remains volatile, with neither side showing signs of backing down.

Adding to the uncertainty, there is rising speculation about potential U.S. involvement. Within the next two weeks, U.S. President Donald Trump is expected to decide if his administration will join Israel in its military operations. Trump has also renewed pressure on the Federal Reserve to cut interest rates, stating they should be 250 basis points lower.

“Geopolitical fears remain a key driver, but macroeconomic factors are also at play. The Bank of England's decision to hold rates steady further limited gains in precious metals. At the same time, short-term U.S. Treasury yields have risen on persistent inflation concerns, while long-term yields have eased,” noted the Augmont Bullion Daily report.

Technical analysts suggest gold has support at $3,340-3,315, and resistance at $3,380-3,400. In Indian rupee terms, gold has support at ₹98,750-98,550 and resistance at ₹99,550-99,740, according to Kalantri.

With geopolitical and economic crosswinds at play, gold may remain volatile in the coming weeks, but investor appetite for safety is far from over.