Gold prices fell for a second consecutive session in New Delhi, losing ₹800 to ₹1,56,200 per 10 grams as investors booked profits after a strong run and international bullion markets struggled to sustain higher levels.
Gold of 99.9 per cent purity had settled at ₹1,57,000 per 10 grams in the previous session. Silver, by contrast, held steady at ₹2,40,000 per kilogram, including taxes, highlighting a divergence between the two precious metals in the domestic physical market.
The decline came as traders reduced positions following a sharp advance that had pushed gold towards levels where buyers became increasingly cautious. International bullion also retreated from a two-month peak after an early-August rally, encouraging investors who had accumulated positions at lower prices to take profits.
Spot gold traded around $4,350 an ounce during part of Friday's session after dropping more than 1 per cent on Thursday. Prices had earlier climbed as high as about $4,449, their strongest level since early June, before selling pressure emerged. Global gold subsequently recovered some ground as the US dollar weakened, underscoring the volatility surrounding the market.
Domestic bullion prices reflect movements in international gold, the rupee's exchange rate against the dollar, import costs and local demand. Changes in any of these factors can cause prices quoted by jewellers and bullion dealers to diverge from global moves during the same trading day.
The latest pullback follows a particularly volatile year for gold. The metal surged to record territory at the start of 2026, driven by geopolitical risks, central-bank demand and concerns over inflation and financial-market stability. It later underwent a substantial correction before recovering through August.
US monetary policy remains one of the strongest influences on bullion. Gold pays no interest, making it comparatively more attractive when investors expect borrowing costs to fall or remain stable. Higher interest rates and bond yields can have the opposite effect by increasing the opportunity cost of holding the metal.
Inflation data released in the United States provided some support to expectations that the Federal Reserve could keep interest rates unchanged at its September meeting. Consumer-price figures were broadly in line with expectations, while producer-price data suggested that underlying inflation pressures were not accelerating as sharply as some investors had feared.
Those signals initially helped gold because a less aggressive monetary-policy outlook tends to weigh on bond yields and the dollar. The strength of the preceding bullion rally, however, prompted traders to lock in gains rather than immediately build larger positions.
The dollar weakened during Friday's international trading, eventually helping spot gold regain ground. A softer dollar generally makes bullion cheaper for buyers using other currencies and can increase demand. US gold futures also ended higher after recovering from earlier weakness.
Geopolitical developments are adding another layer of uncertainty. Tensions involving Iran and attempts to restore normal movement through the Strait of Hormuz have kept energy markets volatile. Disruption to oil supplies could push crude prices higher and revive inflation concerns, complicating expectations for monetary policy.
That creates competing forces for gold. Heightened geopolitical risk usually strengthens demand for safe-haven assets, while an oil-driven rise in inflation could encourage central banks to maintain tighter monetary policy, potentially restraining bullion.
Silver showed greater resilience in New Delhi, remaining unchanged at ₹2,40,000 per kilogram even as gold weakened. International silver traded around $64.7 an ounce during Friday's session, maintaining much of the recovery recorded over the preceding weeks.
Gold's longer-term investment case continues to be supported by central-bank purchases and demand for assets viewed as protection against currency, sovereign-debt and geopolitical risks. The World Gold Council has highlighted the unusually wide swings in bullion during 2026, when prices moved from record territory above $5,000 an ounce early in the year to below $4,000 before rebounding.
