Gold Futures Plunge to a 3-Month Low as a Strong Dollar and Rate Hike Bets Batter the Market

The precious metals market is facing severe downward pressure. Domestic gold futures tumbled by Rs 1,834 on Wednesday, crashing to a three-month low of Rs 1.44 lakh per 10 grams. This sharp drop comes as a surging US dollar and growing expectations for higher interest rates keep traders away from safe-haven assets.

Domestic and Global Markets Hit Hard
On the Multi Commodity Exchange (MCX), the yellow metal decreased by 1.25%, settling at Rs 1,44,695 per 10 grams in a business turnover of 9,508 lots. Buyers haven’t seen prices this low since March 23, when gold closed at Rs 1,45,069. The international stage mirrors this domestic slump. Comex gold futures finally broke below the psychological $4,100 barrier for the first time in nearly eight months. The metal lost $51.55 (a 1.24% drop) to sit at $4,097.85 per ounce. It previously traded near these numbers back on October 28, 2025.

The Three Forces Driving the Selloff
According to market experts like Renisha Chainani from Augmont, a combination of three massive factors is accelerating this global selloff:

The Federal Reserve and a Strong Dollar: The US central bank continues to flash hawkish signals. Financial markets currently price in an 86% probability of another interest rate hike by December 2026. This aggressive stance pushed the US Dollar Index above the 101 mark, making gold highly expensive for foreign buyers.

The AI Stock Crash: A sudden, sharp correction in AI-linked tech stocks triggered a broad risk-off wave. The panic quickly spilled over into precious metals as investors scrambled to liquidate assets and move cash into high-yield Treasury bonds.

A Fragile Middle East Truce: A temporary peace agreement between the US and Iran initially eased market fears. However, uncertainty remains high. US President Donald Trump claimed on Tuesday that Tehran agreed to indefinite nuclear inspections, a statement Iranian officials quickly disputed.

Gaurav Garg, a Research Analyst at Lemonn Markets Desk, confirmed that this combination of a surging greenback and strict Fed policies has severely dampened domestic demand for bullion.

Waiting on Crucial Inflation Data
Traders are now firmly sitting on the sidelines, waiting for the US Personal Consumption Expenditures (PCE) numbers due out on Thursday. Because the PCE serves as the Federal Reserve’s preferred inflation gauge, this upcoming report will heavily dictate the future path of US monetary policy and trigger the next major price swing for the gold market.