Gold futures on the Multi Commodity Exchange (MCX) hit the 6% lower circuit on Friday, extending losses as the sharp global sell-off in precious metals intensified. Gold prices dropped by over Rs 10,000 per 10 grams during the session, tracking weakness in international markets where bullion pulled back sharply from record highs. The decline comes amid aggressive profit booking after gold’s near-vertical rally and rising speculation that Kevin Warsh could be appointed as the next US Federal Reserve chair, a development seen as potentially hawkish for monetary policy. A firmer US dollar and higher bond yields added further pressure, while the rapid unwinding of leveraged positions amplified the fall on MCX, pushing prices straight into the lower circuit.
Gold prices witnessed a sharp reversal on Friday, snapping a relentless rally as markets reacted to growing expectations that Kevin Warsh may be nominated as the next US Federal Reserve chair. The pullback marked the first major correction after gold scaled fresh record highs earlier this week.
Internationally, gold prices fell more than 3% or about $170, slipping to around $5,180 per ounce after touching levels above $5,500 earlier in the session. The metal had settled at a record $5,318.40 per ounce on Thursday, extending a nine-session winning streak. The sudden reversal triggered heavy selling across global and domestic markets.
In India, the global sell-off translated into a sharp decline on MCX, with gold prices falling nearly Rs 10,000 per 10 grams in a single session, wiping out a significant portion of recent gains. The correction also spilled over into silver, which dropped sharply alongside gold, reflecting broad-based profit booking across precious metals.
Analysts attributed the fall to rising speculation that Kevin Warsh, a known critic of ultra-loose monetary policy, could be appointed as the next Fed chair. Markets began pricing in the possibility of a tighter policy stance ahead, which pushed the US dollar and Treasury yields higher. Since gold is priced in dollars, a stronger greenback typically pressures bullion prices.
The sell-off was further intensified by crowded positioning and leverage after gold’s near-vertical rally. Once prices began to slide, stop-loss triggers and forced unwinding accelerated the decline, highlighting how quickly momentum-driven trades can reverse.
Despite the sharp fall, market participants note that gold remains significantly higher on a year-to-date basis. However, volatility is expected to remain elevated in the near term as investors reassess positioning after the record-breaking rally.
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