Gold prices have experienced a dramatic collapse, crashing below $4,100 per ounce to trade around $4,046 in international markets, with MCX gold opening at ₹1,46,518 per 10 gm and touching an intraday low of ₹1,46,444 within minutes of opening. The precious metal's decline intensified following renewed hostilities between the US and Iran, with the US launching new strikes called 'self-defence strikes' against Iran after Israel and Iran agreed to halt attacks on each other. According to Trading Economics, the latest escalation has cast doubt on the durability of a fragile ceasefire and extended the near-complete closure of the Strait of Hormuz, bringing back fears of a prolonged energy crisis globally and inflationary pressures. Rising energy costs linked to the conflict have heightened fears of persistent inflation and the possibility of further central bank tightening, weighing on non-yielding assets such as precious metals.
Gold prices could face further downside over the next three months, with Citigroup lowering its near-term price target for the precious metal. The brokerage has cut its three-month gold target to $4,000 per ounce from $4,300, though it maintained its six- to 12-month target of $4,500 per ounce, signalling that it remains constructive on the longer-term outlook despite near-term headwinds. According to Kotak Securities, stronger-than-expected US economic data continues to strengthen the case for a tighter monetary policy stance, keeping pressure on precious metals. Robust US labour market data has reinforced expectations that the Federal Reserve could keep interest rates elevated for longer, with markets now pricing in roughly a 70% probability of a rate hike by December. However, recent positioning data reveals that smart money and whale traders had already moved to short positions before Citi's revision, with the perps book showing combined short positions of nearly $18.8 million.
Silver has experienced an even more severe decline, crashing over 2% to fall below the $64 mark, currently trading around $63.84 per ounce, also the lowest level since December 8, 2025. The precious metal's performance has been particularly weak, with the selloffs in precious metals, which should have found support in the latest Middle East crisis, now trapped in a conundrum. The major reason behind the latest crash is the renewed hostilities between the US and Iran, which attacked each other again, right after President Donald Trump had warned Israel to stop attacking the Islamic Regime. The latest escalation has cast doubt on the durability of a fragile ceasefire and the prospects for a broader peace agreement, while extending the near-complete closure of the Strait of Hormuz.
The precious metals crash is occurring ahead of crucial US CPI inflation data, which is expected to reach its highest level in three years at 4.2% in May 2026. According to LKP Securities, the USA will declare its CPI inflation data for May 2026 on Wednesday, which will be observed as it will give further clarity on rates decision from the US Federal Reserve who will announce the June policy outcomes later this week. The market is estimating the US inflation rate to climb to 4.2% in May, which could be its highest level in three years, owing to the global energy crisis. Market focus has now shifted to the upcoming US inflation data due on Wednesday, which will be crucial in shaping expectations around future Federal Reserve policy, with investors also closely watching comments from Fed Chair Kevin Warsh for clues on the interest rate outlook. As per Mint, rising crude oil prices have fueled speculations about the rise in inflation, a development that has fuled the US Fed rate hike buzz in the upcoming US Fed meeting.
MCX gold July futures contract dipped 0.76% to ₹1,45,282 per 10 grams as of 9:34 am on Thursday, June 11, while MCX silver July futures dropped 0.86% to ₹2,33,490 per kg. The latest decline comes as crude prices soared after US launched fresh strikes against Iran, heightening geopolitical tensions. Gold had earlier risen in the global market amid growing tensions between US and Iran, pushing up oil prices and raising inflation concerns, with the precious metal jumping up to 1.1%, reversing a similar drop that took the metal close to $4,000 an ounce earlier Thursday. The US military said it had completed strikes against targets in Iran, after President Donald Trump accused the country of dragging out talks on an interim peace deal. In response, Tehran announced that it is closing the Strait of Hormuz to all vessels, with Iran's Islamic Revolutionary Guard Corps (IRGC) announcing to close Strait of Hormuz 'until further notice' while claiming that the US made 'repeated violations' of their April ceasefire.
According to Ponmudi R, CEO of Enrich Money, as reported by Goodreturns, the commodities complex is expected to remain highly headline-driven this week. Geopolitical developments in the Middle East, crude oil supply dynamics, US dollar movement, central-bank commentary, and key macroeconomic releases are likely to dictate short-term market direction. The expert notes that while bullion has witnessed recent selling pressure and energy markets continue to price in residual geopolitical risk, sustained directional trends may require stronger confirmation from both macroeconomic and geopolitical developments. Volatility is therefore expected to remain elevated across major commodity segments throughout the week. As per Jateen Trivedi, VP Research Analyst at LKP Securities, market focus has now shifted to the upcoming US inflation data due on Wednesday, which will be crucial in shaping expectations around future Federal Reserve policy. Unless there are fresh shocks, Citigroup sees upside catalysts to be capped in the near term, with gold potentially moving higher only if inflation reignites or economies weaken further.
