– Gold’s spectacular rally has gone into reverse. After touching an all-time intraday high of Rs 1,92,991 per 10 grams on the Multi Commodity Exchange (MCX) earlier this year, the precious metal is now trading at around Rs 1,43,610, erasing nearly Rs 49,400 in value, a correction of about 26%.The sharp fall has left investors and jewelry buyers wondering whether the worst is over or if gold prices could decline even further.Gold surged to record levels earlier this year as investors rushed to safe-haven assets amid rising geopolitical tensions, concerns over global economic growth and expectations that major central banks would begin cutting interest rates.Escalating tensions in West Asia, central bank purchases and a weaker US dollar also helped fuel the rally, taking gold to an unprecedented high on the MCX.

However, those factors have now taken a back seat.The biggest reason behind the correction is the changing outlook for US interest rates.Markets now expect the US Federal Reserve to keep borrowing costs higher for longer, with traders pricing in three rate hikes this year and nearly an 80% chance of another increase in December.Higher interest rates reduce the appeal of gold because the precious metal does not generate any income. As bond yields rise, investors tend to shift money away from gold and towards interest-bearing assets.The US dollar has also strengthened, making gold more expensive for overseas buyers and adding further pressure on prices.

Gold is now headed for its fourth consecutive monthly decline, with international prices expected to end the month more than 10% lower.Normally, geopolitical tensions boost demand for gold as investors seek safer assets.But this time, the market has been more focused on the inflationary impact of the conflict than on the conflict itself.Fresh military strikes between the US and Iran over the weekend briefly pushed crude oil prices higher. However, hopes that Washington and Tehran will continue diplomatic talks over the Strait of Hormuz have limited safe-haven buying.Instead, higher oil prices have reinforced concerns that inflation could remain elevated, increasing the likelihood that the Federal Reserve will keep interest rates high.According to Axis Securities, gold managed to recover modestly after the latest US PCE inflation data broadly matched market expectations. However, the brokerage said the precious metal remains under pressure as the Federal Reserve continues to maintain a hawkish stance, supporting the US dollar.