On the Multi Commodity Exchange (MCX), gold futures dropped ₹1,339 from the opening levels to ₹1.57 lakh per 10 grams, down 0.84% from the previous close. Silver futures fell ₹4,089, or 1.58%, to ₹2.55 lakh per kilogram.
The decline in domestic prices largely tracked weakness in international markets. Spot gold slipped around 0.2% to about $5,007 per ounce, while US gold futures also traded lower.
Stronger dollar, higher yields weigh on bullion
Analysts attributed the pressure on gold prices to a stronger US dollar and rising US Treasury yields, which tend to reduce the appeal of non-yielding assets such as gold.
Aamir Makda, Commodity & Currency Analyst at Choice Broking, said The primary catalysts for this decline are a strengthening US Dollar, bolstered by rising oil prices and geopolitical concerns in the Middle East, and a surge in US Treasury yields, both of which have placed significant pressure on the precious metal.
Higher yields increase the opportunity cost of holding bullion, which does not offer interest returns.
Oil prices, inflation concerns in focus
Elevated crude oil prices have also influenced market sentiment. Oil has remained above $100 per barrel amid ongoing conflict in West Asia, raising concerns that higher energy costs could push inflation higher globally.
Analysts said this dynamic could prompt the US Federal Reserve to remain cautious about cutting interest rates.
Christopher Wong, strategist at OCBC, noted that if energy prices continue to lift inflation, the Federal Reserve may delay easing monetary policy, which could keep real yields elevated and act as a headwind for gold.
Markets widely expect the US Federal Reserve to hold interest rates steady when it announces its policy decision later this week.
Geopolitical tensions add volatility
Investors are also monitoring developments in the Gulf region after tensions disrupted global oil supplies and forced the closure of the Strait of Hormuz, a key shipping route.
While geopolitical risks usually support safe-haven assets like gold, analysts said near-term price movements may remain volatile.
Piyush Jhunjhunwala, Founder and CEO of Stockify, said gold prices in India have been moving in a volatile range in recent weeks as investors respond to global market developments.
He added that geopolitical tensions, inflation concerns and evolving global monetary policies continue to shape investor sentiment toward gold.
Jhunjhunwala said gold prices will continue to react to geopolitical developments, inflation data and signals from central banks in the coming months.
“Short-term volatility may persist, but long-term demand for gold remains supported by investment needs, festive purchases and its historical role as a financial protection asset,” he said.
Long-term role of gold and silver
Market experts continue to view bullion as an important portfolio diversifier despite short-term price fluctuations.
Vijay Kuppa, CEO of InCred Money, said gold and silver play a key role in portfolios because of their behaviour during market stress.
“In a well-constructed portfolio, gold and silver earn their place not because of what they return in isolation, but because of how they behave relative to everything else. Low correlation to equities. A hedge against currency debasement. Resilience in risk-off environments,” he said.
He added that investors should avoid trying to time bullion markets based on short-term movements and instead maintain exposure as part of long-term diversification.
–With agencies inputs
