On the Multi Commodity Exchange (MCX), gold futures for August delivery fell ₹1,413, or 0.98%, to ₹1.42 lakh per 10 grams. The decline follows last week’s sharp correction, when gold futures dropped ₹3,900, or 2.65%, to close around ₹1.43 lakh per 10 grams.
Silver also remained under pressure, tracking global weakness as investors reduced exposure to non-yielding assets.
Why are gold and silver prices falling?
The latest decline comes despite renewed geopolitical tensions in West Asia, where fresh military exchanges between the US and Iran have raised concerns over energy supplies.
The conflict has pushed crude oil prices higher after Iran announced a temporary closure of the Strait of Hormuz, a crucial route for global oil shipments. Higher oil prices have revived fears that inflation could remain elevated, prompting investors to expect the US Federal Reserve to keep interest rates higher for longer.
Higher interest rates typically support the US dollar and Treasury yields, making non-interest-bearing assets such as gold and silver less attractive.
“Gold prices remained under pressure as renewed military tensions between the US and Iran boosted oil prices, reviving concerns over energy-driven inflation and reinforcing expectations that the Federal Reserve could keep interest rates higher for longer,” said Manav Modi, Commodities Analyst at Motilal Oswal Financial Services.
Global markets add to pressure
Internationally, COMEX gold slipped below $4,100 an ounce, while silver also extended losses.
According to Pinky Yadav, Commodity Fundamental Analyst at Choice Broking, renewed geopolitical tensions strengthened the US dollar and dampened investor sentiment.
She said investors are now awaiting key US inflation data—including the Consumer Price Index (CPI) and Producer Price Index (PPI)—along with Federal Reserve Chair Kevin Warsh’s testimony before Congress, which could offer fresh clues on the future path of US interest rates.
Why higher yields matter for bullion
Although gold is widely regarded as a safe-haven asset during periods of uncertainty, it does not generate interest income.
When Treasury yields rise and the dollar strengthens, investors often shift towards interest-bearing assets, reducing demand for precious metals. That dynamic has outweighed safe-haven buying even as geopolitical risks remain elevated.
Silver has come under additional pressure because it is both a precious and industrial metal. Concerns over slowing industrial demand have added to the downside.
What could move prices next?
Analysts expect bullion to remain volatile this week as markets assess several key triggers:
- US CPI and PPI inflation data
- Comments from Federal Reserve officials, including Chair Kevin Warsh
- Developments in the US-Iran conflict and their impact on crude oil prices
- Movement in the US dollar and Treasury yields
Any signs of easing inflation or a softer stance from the Federal Reserve could support gold and silver. However, if oil prices continue to rise and inflation concerns intensify, bullion may remain under pressure in the near term.
Long-term outlook remains constructive
Despite the recent correction, several market participants remain positive on the long-term outlook for precious metals.
A recent outlook by Tata Mutual Fund said gold continues to benefit from sustained central bank purchases, while silver is supported by growing demand from electronics, artificial intelligence hardware and renewable energy.
The fund house expects 2026 to mark the sixth consecutive year of a global silver supply deficit, although both metals could remain volatile in the near term due to uncertainty around US interest rates and the strength of the dollar.
