New Delhi, Jun 5 (PTI) Gold prices plunged by Rs 1,221 to Rs 1.58 lakh per 10 grams in futures trade on Friday as elevated oil rates, persistent tensions in West Asia and concerns over higher interest rates dented investor sentiment.

On the Multi Commodity Exchange, the yellow metal for August delivery declined by Rs 1,221, or nearly 1 per cent, to Rs 1,58,326 per 10 grams in a business turnover of 8,346 lots.

Analysts said precious metal prices remained under pressure as disruptions to energy supplies through the Strait of Hormuz continued to fuel inflation concerns and strengthen expectations of higher interest rates globally.

"Gold prices on the MCX fell as investors remained focused on persistent geopolitical tensions in the Middle East and their implications for inflation and interest rates," Pinky Yadav, Commodity Fundamental Analyst, Choice Broking, said.

The US Dollar Index held steady near 99.4, supported by continued safe-haven demand amid regional uncertainty, she added.

In the international markets, Comex gold futures for the August contract slipped USD 16.63, or 0.37 per cent, to USD 4,488.37 per ounce in New York.

Traders are navigating conflicting signals from West Asia.

President Donald Trump said negotiations with Iran were approaching their final stage and indicated reluctance to be drawn into a broader conflict.

However, Iranian Foreign Minister Abbas Araghchi countered that no meaningful progress had been achieved in the talks.

Adding to the uncertainty, Israel continued its ground operations in southern Lebanon, while Hezbollah rejected a US-brokered ceasefire proposal involving Tel Aviv and Beirut.

According to Manav Modi, Commodities Analyst at Motilal Oswal Financial Services Ltd, market participants are closely awaiting the US non-farm payrolls report later in the day, which is expected to provide important clues on the Federal Reserve's interest rate outlook and the near-term direction of bullion prices.

On the domestic front, the Reserve Bank of India (RBI) on Friday projected retail inflation for 2026-27 at 5.1 per cent, higher than its earlier estimate of 4.6 per cent, largely due to mounting input costs, triggered by the pass-through of higher global energy prices to retail rates of petrol and diesel.

Ankita Pathak, Head of Global Investments at Ionic Asset, said, "RBI has demonstrated that inflation concerns are more driven by global supply-side factors and raising domestic rates is unlikely to curb inflation pressures in the short-term".

Growth slowdown is inevitable, revising down FY27 growth from 6.9 to 6.6 per cent, she added.

"However, we believe all eyes will be on the Federal Open Market Committee later this month; if the US moves to a tightening bias, emerging markets central banks are unlikely to have much choice, especially when other developed markets, including the EU and Japan, are also expected to hike rates in the upcoming policy," Pathak added. PTI HG HG SHM SHM

Inflation concerns and higher rate expectations weigh on gold prices as the reserve bank raises its inflation outlook. Gold prices weakened as elevated oil rates, geopolitical tensions in West Asia, and expectations of higher global interest rates ressed investor sentiment. Market participants also tracked the US dollar and upcoming US labour data for direction on bullion prices amid inflation concerns. The Reserve Bank of India raised its retail inflation projection for 2026-27, citing higher global energy prices feeding into domestic fuel costs, and lowered its FY27 growth expectation.