When the going gets tough, the weak have to sell their gold, or hinder its purchase

 As gold’s tumble continues, traders bet the pain may last for two more years

... “Turkey’s central bank is selling gold and buying dollars trying to support the lira, and the gulf nations – Qatar, UAE, Saudi Arabia – they need the money for the war so they’ve been selling gold, too,” Nigam Arora, founder of the Arora Report, said in a call. “At the same time, India’s raised duties on gold, and anyone who’s just watching charts, they had stops under $4,400 and had to start selling when it broke that level.“ ...       

Meanwhile in India . . .

Reserve Bank of India’s forex defense tool surpasses $110 billion as rupee slides 

The RBI's net-short dollar book has ballooned to record levels as India's central bank fights to stabilize a currency under siege from oil prices, geopolitical tensions, and capital outflows. 

India’s central bank is burning through an unprecedented amount of financial ammunition to keep the rupee from cratering. The Reserve Bank of India’s forward dollar-selling contracts have crossed the $110 billion mark, reaching an estimated $110-115 billion in early June 2026, a record for the institution’s net-short dollar book.

Think of it like this: instead of selling dollars from its vault today and watching reserves drain in real time, the RBI is writing IOUs to sell dollars at a future date. It’s a way to defend the currency now while kicking the reserve hit down the road. The problem is that the IOUs are piling up fast, and the road isn’t getting any longer. ...

India imports roughly 85% of its crude oil needs, making it acutely sensitive to energy cost swings. When oil gets more expensive, India needs more dollars to pay for it, which weakens the rupee.

The forward sales strategy itself carries a subtle risk. Those contracts eventually mature, meaning the RBI will need to deliver dollars at the agreed-upon future dates. If the rupee hasn’t stabilized by then, the central bank could face a situation where it’s simultaneously defending the currency in real time and settling old commitments. ...

Why the world has the petrodollar, not a petroyuan

Don’t call time on dollar dominance just yet, say analysts as ‘petroyuan’ call sparks debate 

... “Oil is not priced in US dollars simply because the United States has long acted as the world’s policeman,” wrote Sonal Desai, Franklin Templeton’s fixed income CIO.  

“Oil exporters have a strong self-interest in getting paid in USD, because of what dollars represent: access to the deepest, most liquid capital markets in the world, backed by an institutional and legal framework that protects property rights and enforces contracts, supported by a strong, dynamic, and innovative economy.” ...

Franklin Templeton’s Desai added in the note that building the right infrastructure for a credible replacement, consisting of “deep markets, rule of law, full convertibility, a track record of macro stability”, takes decades, not years. ...

Desai added that the dollar’s recent weakness is simply a function of its characteristics. 

“Some dollar softness is perfectly consistent with global reserve currency status,” Desai wrote. 

“Unlike the renminbi, the dollar is a freely floating currency. It floats – up and down.”