Gold prices fell to their lowest level in nearly a week on Thursday as a strengthening U.S. dollar and upbeat equity markets dampened demand for the precious metal.
The decline follows a U.S. federal court ruling that influenced investor sentiment and spurred optimism in riskier assets.
Gold Drops As Dollar Strengthens
As of 10:13 a.m. IST, spot gold was trading down 0.5% or USD 15.13, at USD 3,273.85—its lowest level since May 20. The drop in prices is largely attributed to a firmer U.S. dollar, which makes gold more expensive for buyers using other currencies. The dollar index was up 0.4% at USD 100.29.
Adding to the pressure, U.S. Treasury yields also edged higher, making non-yielding assets like gold less attractive to investors.
U.S. Court Ruling Shifts Sentiment
The fall in gold prices also follows a major legal setback for former U.S. President Donald Trump. On Wednesday, a U.S. federal court ruled that Trump’s sweeping tariffs on a broad range of imports exceeded his legal authority.
“The court does not pass upon the wisdom or likely effectiveness of the President’s use of tariffs as leverage,” the three-judge panel noted. “That use is impermissible not because it is unwise or ineffective, but because [federal law] does not allow it.”
The court issued a permanent injunction on the tariffs, a move seen as positive for global trade and equity markets. In response, the Trump administration has filed a notice of appeal, disputing the court’s jurisdiction and indicating the case may head to the Supreme Court.
Market Optimism Hurts Safe-Haven Demand
Investor confidence received a further boost from strong quarterly earnings by U.S. tech giant Nvidia, which contributed to a rally in global stock markets. Indian equities opened higher on Thursday, mirroring positive global cues.
This renewed risk appetite led investors to rotate out of safe-haven assets like gold, contributing to the metal’s decline.
Possible Further Downside Ahead
Mrinesh Jain, Director at Bombay Bullion Metal Hub LLP, said the court’s ruling acted as a catalyst for the current drop in gold prices.
“The US federal court’s decision triggered a downside in gold prices, and if there is no response or counteraction from former President Trump, we could see further declines,” Jain said. He added, “Prices may potentially retest the support level around USD 3,125.”
With the dollar strengthening and equity sentiment improving, analysts believe gold could remain under pressure in the near term unless there is renewed geopolitical or economic uncertainty.
Read More: Supreme Court, Delhi High Court, States High Court, International
