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Dollar Strength Outweighs Geopolitical Fears
Precious metals faced pressure on May 20, 2026. June gold futures closed down 0.41% at Rs 1,58,428 per 10 grams, while July silver futures declined 0.79% to Rs 2,67,985 per kilogram. Despite rising oil prices and Middle East tensions, which usually boost safe assets, a strong U.S. dollar limited gains. International spot gold fell 0.71% to $4,479.10 per ounce, and silver dropped 1.40% to $71.11 per ounce on early Comex trading.
Indian Rupee Hits Record Low
Adding to the downward pressure, the Indian rupee reached an all-time low, opening at Rs 96.86 against the dollar. This depreciation makes dollar-priced commodities like gold more expensive for Indian buyers, potentially reducing domestic demand.
U.S. Economic Data in Focus
Markets are now focused on the upcoming U.S. Purchasing Managers' Index (PMI) data for manufacturing and services. These reports are expected to signal the health of the U.S. economy and could influence expectations for Federal Reserve interest rate policy and the dollar's trajectory.
Analyst Insights on Price Levels
Jateen Trivedi, VP Research Analyst at LKP Securities, noted that while some reports suggested a temporary easing of U.S.-Iran conflict, warnings of potential escalation create global market uncertainty. Trivedi forecasts gold to trade between Rs 1,58,000 and Rs 1,62,000. An Augmont Bullion report highlighted gold's support near $4,500 per ounce and silver's critical level around $75 per ounce. A drop below $75 could send silver towards $70 and $67, while a rebound might lift it to $80-$82.
Dollar's Impact on Bullion
The U.S. dollar's strength is a significant headwind for gold and silver, as a stronger dollar makes these commodities more expensive for holders of other currencies. While geopolitical events can offer short-term support, the persistent dollar strength, often linked to U.S. interest rate expectations or strong economic data, poses a more sustained challenge for precious metals. The performance of emerging market currencies like the Indian rupee also impacts global commodity demand.