The benchmark MCX August gold futures contract was trading at ₹1.45 lakh per 10 grams, while the benchmark silver futures contract hovered around ₹2.22 lakh per kg.
The decline comes after spot gold touched a one-week low overnight.
The latest weakness in bullion followed renewed geopolitical tensions in the West Asia after the US launched fresh strikes on Iran, raising concerns over disruptions in the Strait of Hormuz. The escalation pushed oil prices and the US dollar higher, reviving fears that inflation could remain elevated.
Higher inflation expectations have also strengthened the case for tighter monetary policy in the US. Minutes of the Federal Reserve’s June meeting showed policymakers remained concerned about inflationary pressures, with markets continuing to price in the possibility of another rate hike. Since gold does not offer any yield, higher interest rates typically reduce its attractiveness relative to interest-bearing assets.
Despite the near-term volatility, industry experts expect gold prices to remain broadly range-bound over the second half of 2026.
Colin Shah, Managing Director of Kama Jewelry, said the yellow metal is reacting sharply to geopolitical risks after a historic rally earlier this year. He said crude oil prices, the strength of the US dollar and uncertainty surrounding the Federal Reserve’s policy path will remain the key drivers of gold prices in the coming months.
According to Shah, while ongoing peace efforts could gradually ease geopolitical tensions, gold remains highly sensitive to economic and geopolitical developments, with even minor triggers capable of causing sharp price swings. He expects prices to remain broadly range-bound during the second half of calendar year 2026.
On the domestic front, he said the upcoming festive season is likely to support jewellery demand, although consumers may increasingly opt for smaller, purpose-led purchases instead of large-ticket buying as elevated prices continue to influence spending decisions.
Shah also said gold exchange-traded funds (ETFs), which attracted healthy inflows amid heightened geopolitical uncertainty earlier, are likely to witness continued volatility. While investors continue to favour ETFs for their liquidity and price transparency, movements in global interest rates and currency markets are expected to drive flows.
Physical gold demand, though currently subdued, is expected to remain competitive as the festive and wedding season approaches.
Pinky Yadav, Commodity Fundamental Analyst at Choice Broking, said both COMEX and MCX gold prices remain under pressure as investors balance geopolitical safe-haven demand against rising bond yields and a stronger dollar. She noted that markets remain focused on upcoming US economic data and further signals from the Federal Reserve, which are likely to determine the next direction for bullion.
