The decline comes even as the US dollar weakened after fresh data showed producer prices remained subdued in June, reinforcing expectations that the US Federal Reserve is unlikely to raise interest rates in the near term. Lower interest rate expectations generally support non-yielding assets such as gold by reducing the opportunity cost of holding them.
However, gains in bullion remained capped as crude oil prices continued to climb amid renewed hostilities in the West Asia. Brent crude rose to around $85.45 a barrel, extending this week’s rally, after tensions between the US and Iran intensified. Higher oil prices could fuel inflation concerns, complicating the outlook for global interest rates.Market sentiment also remained cautious ahead of quarterly earnings from Taiwan Semiconductor Manufacturing Co. (TSMC), while weakness in global technology stocks weighed on broader risk appetite across Asian markets.
Gold is often viewed as a safe-haven asset during periods of geopolitical uncertainty and economic volatility. However, the precious metal can also come under pressure when investors turn cautious ahead of key market events or book profits after recent gains.
Silver, which has both precious metal and industrial uses, tracked gold lower amid the broader weakness in commodity markets.
-With Reuters inputs
