Last week saw a sharp decline in gold prices across the world due to new inflation fears due to the strong US dollar and rising crude oil prices. At the beginning of the US-Iran war, the price of gold in the country’s futures market MCX was around the level of Rs 1,60,000. Which faced a huge fall last week and the price came down to Rs 1,44,825 per 10 grams. The fall in the international market was even sharper and the price was seen at $ 4,574.90 per ounce.
According to market experts, today the price of gold is going through a complex economic environment, in which geopolitical tension and expectations of monetary tightening are pulling in opposite directions. He said that the decline in gold prices may continue, and the price of gold in India may be seen at Rs 1.25 to 1.27 lakh per ten grams. Whereas in the international market the price of gold can come to 4200 to 4250 dollars per ounce.
US-Iran war intensifies
Pointing to the impact of the US-Iran war, Sugandha Sachdeva, Founder, SS WealthStreet, said in a Mint report that the escalating conflict in West Asia – particularly Israel’s attack on Iran’s ‘South Pars’ gas sector and Iran’s retaliatory attacks on energy infrastructure in key Gulf countries – has significantly increased global energy risk premiums.
This has led to a huge surge in crude oil prices, increasing concerns of ‘imported inflation’ across the world. Gold prices may remain under pressure in the near term amid a strong US dollar, high bond yields, persistent inflation concerns stemming from rising crude oil prices, and diminishing expectations of a major interest rate cut by the US Fed.
Cautious stance of central banks
Explaining the reason behind gold prices remaining stable or negative during the US-Iran war, Commodity and Currency Expert Anuj Gupta said that despite the ongoing US-Iran war, gold prices remain stable or negative today. This is because the market is anticipating an inflation challenge for global central banks. He said rising crude oil prices are expected to further boost global inflation, and in such a situation, central banks will have no option but to raise interest rates or keep them stable. This was clearly visible last week, when the US Federal Reserve, Bank of Japan, Bank of Canada and Bank of England indicated that they would adopt a cautious to hawkish stance on interest rates.
Sugandha Sachdeva of SS WealthStreet said in a media report that central banks around the world have adopted a more cautious and in some cases strict attitude. The US Federal Reserve has admitted that the impact of the conflict on inflation is still very uncertain, due to which it has had to reset its interest rate expectations for 2026. While earlier the markets were expecting a cut in interest rates, now the environment is leaning towards ‘high interest rates for a long time’. If inflationary pressure persists, there is a possibility of interest rates increasing. He said that other big central banks like ECB, Bank of Japan and Bank of England also seem to be leaning towards further tightening of monetary conditions.
Strong US Dollar Index
Sugandha Sachdeva said in the Mint report that the changing outlook on interest rates has strengthened the US dollar index; In the last few weeks, this index has increased rapidly and has reached above the level of around 95.50 to 100. A stronger dollar as well as rising US bond yields have put pressure on gold prices, even as geopolitical risks have increased. He further said that in addition, the recent decline in risk assets around the world led to selling due to margin calls and lack of liquidity, which led to ‘long liquidation’ (selling of purchased positions) in gold. From a technical point of view, after the rise in gold prices due to increase in geo-political tension, now gold seems to be going into a period of ‘corrective consolidation’.
future of gold prices
Jatin Trivedi, VP of Commodity and Currency Research at LKP Securities, expressed hope in the media report that the grip of ‘bears’ (those who fall in prices) on gold prices will remain strong. He said that the general market environment still remains weak, because important macro triggers related to the economy are still not in favor. Interest rates are expected to remain high, while crude oil prices also remain strong due to ongoing geopolitical tensions.
Due to this, there are concerns about inflation and the scope for further rise in gold prices has reduced. Overall, gold prices are likely to remain weak and may see considerable fluctuations. The trading range of gold in the near future is expected to be between ₹ 1,40,000 to ₹ 1,47,000.
Sugandha Sachdeva Mitt of SS Wealth said in a report that she believes gold prices may remain under pressure in the near term due to a stronger US dollar, higher bond yields, inflation concerns due to rising crude oil prices, and diminishing expectations of a major interest rate cut by the US Fed.
Sugandha Sachdeva said that internationally, prices are facing stiff resistance in the range of $5,4205,450 an ounce, while it is necessary to sustainably sustain above $5,280 an ounce to resume the broad bullish trend. If prices fail to recapture these levels, they may remain under pressure, and the downside risk may increase towards $4,250 an ounce.
Sugandha Sachdeva in media report that today gold price on MCX is facing strong resistance near Rs 1,70,000 per 10 grams, while Rs 1,65,000 remains an important near-term pivot. As long as prices remain below these levels, the trend is likely to sustain a correction and prices may fall towards Rs 1,35,000 and Rs 1.25 to Rs 1.27 lakh per 10 grams.
How much did gold become cheaper in 50 days?
If we talk about the last 50 days i.e. from the peak of gold till now, the price of gold has come down to Rs 48 thousand per ten grams. On January 29, the price of gold in the futures market of the country was Rs 1,93,096 per 10 grams. From where a fall of Rs 48,604 per 10 grams has been seen in the price of gold. Whereas in the current month also, gold has become cheaper by Rs 17,612 per ten grams. If the price of gold reaches Rs 1.25 lakh, then there will be a decline of more than Rs 68 thousand per ten grams in the price of gold from the peak.