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Spot gold dropped 0.4% to $2,905.64 per ounce as of 0426 GMT.
US gold futures also declined 0.4% to $2,918.20.
In India, 24-carat gold fell by ₹290 to ₹8,798.3 per gram, while 22-carat gold dropped by ₹270 to ₹8,066.3 per gram.
Key market factors affecting gold prices
Stronger US dollar and treasury yields
The dollar index gained 0.2%, moving away from recent lows. Higher yields on US 10-year Treasury bonds further pressured gold, as non-yielding assets like bullion become less attractive.
US inflation data and Fed’s rate outlook
The Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation measure, will be released on Friday (February 28).
Market forecasts suggest a 0.3% rise, the same as in December.
A stronger-than-expected inflation reading could reduce expectations for near-term Fed rate cuts, potentially weighing on gold.
Global trade tensions and safe-haven demand
Concerns over US trade tariffs on Europe, Canada, and Mexico have fueled market uncertainty, supporting gold.
“Gold consolidates around record-high prices as investors seek safety amid trade worries,” said Prithviraj Kothari, MD, RiddiSiddhi Bullions Ltd (RSBL).
Falling US housing data and rupee depreciation
Weak US housing data and foreign portfolio investor (FPI) outflows in Indian equity markets have supported domestic gold prices.
“After Tuesday’s (February 25’s) sell-off, gold rebounded due to weak US new home sales and a falling rupee,” said Rahul Kalantri, VP, Commodities, Mehta Equities.
Investment outlook
“Gold prices remain resilient despite market fluctuations,” said Sandip Raichura, CEO – Retail Broking & Distribution, PL Broking.
While short-term dips may occur, geopolitical uncertainties and Fed policies will continue to influence prices.
Analysts expect gold to trade between $2,875 per ounce and $3,000 per ounce in the near term. Investors should watch US economic data and central bank commentary for further cues.
