Gold, silver fall as Middle East tensions spur rate hike bets
Precious metal prices dropped sharply after escalations in the US-Iran conflict drove oil higher and strengthened the dollar, shifting market focus to upcoming Federal Reserve signals on inflation.
Spot gold fell 1.2% to $4,072.78 an ounce, while spot silver declined 1.6% to $58.89. U.S. gold futures for August delivery slipped 0.8% to $4,081.70. The selloff extended to platinum and palladium, which dropped 1.1% to $1,610.22 and 1.3% to $1,260.15 respectively.
The price declines followed a weekend escalation between the United States and Iran. Tehran launched heavy missile and drone attacks on U.S. facilities across Gulf states and claimed to have closed the Strait of Hormuz. Rather than seeking safe-haven assets, investors reacted to the inflationary shock: crude prices jumped roughly 4%, the U.S. dollar strengthened, and Asian equity markets sold off.
Higher energy costs are reviving expectations of tighter monetary policy. Markets are now pricing in the risk that the Federal Reserve may need to keep interest rates elevated to combat a potential oil-driven inflation spike. This dynamic is heavily pressuring non-yielding assets like precious metals.
On the Multi Commodity Exchange (MCX), the pullback was pronounced. August 2026 gold futures fell by Rs 2,000 to Rs 1,41,557 per 10 grams. September 2026 silver futures dropped 2.5%, losing Rs 5,400 to trade at Rs 2,17,277 per kg.
Traders are looking to Washington for near-term direction. Federal Reserve Chair Kevin Warsh is set to deliver his first semiannual testimony before Congress this week. That appearance, alongside June U.S. CPI, PPI, and retail sales data, will provide fresh signals on inflation and the monetary policy outlook.
Manoj Kumar Jain of Prithvi Finmart noted that long-term investors could consider accumulating gold and silver in a staggered manner during the current decline. However, he advised traders to wait for greater market stability before taking fresh positions.
For the international spot market, Jain pegged immediate support for gold at $4,074 to $4,040, with resistance at $4,144 to $4,180. He sees spot silver support at $59.10 to $57.70 and resistance between $61.20 and $62.40. On the MCX, he projects gold support at Rs 1,41,100 to Rs 1,42,400 and resistance at Rs 1,44,400 to Rs 1,45,550. For MCX silver, support is at Rs 2,16,600 to Rs 2,20,000, with resistance at Rs 2,26,000 to Rs 2,28,800.
