Gold and silver prices experienced significant declines on Tuesday evening session on MCX as investors booked profits following Monday's surge driven by escalating tensions in West Asia. According to The Economic Times, gold futures were trading at ₹1.66 lakh per 10 grams, down ₹4,355 or 2.56%, while silver futures declined more steeply, falling ₹17,281 or 6% to ₹2.61 lakh per 100 grams. The decline came after a sharp rally on Monday when safe-haven demand spiked following the widening conflict between the US, Israel and Iran. Trading was limited to the evening session due to Holi, with domestic exchanges closed during the day.
The geopolitical tensions have intensified with Iran's strikes on Gulf states potentially widening the conflict against Tehran, according to latest analyst assessments. As reported by multiple sources, Iran's attacks on US interests across the Middle East have hit the US Embassy in Saudi Arabia, causing limited fire according to Saudi Arabia's Defense Ministry, with the embassy urging Americans to avoid the compound. This follows an attack on the US Embassy in Kuwait that announced Tuesday it had been closed until further notice. The International Atomic Energy Agency (IAEA) confirmed damage to Iran's nuclear fuel enrichment plant, though no radiological impact has been reported. Iranian attacks have hit multiple US interests, raising concerns that the conflict may expand beyond initial targets.
The precious metals decline was further amplified by a stronger US dollar, which rose 0.9% to a more than one-month high, and rising US Treasury yields. As reported by The Economic Times, US Treasury yields also moved higher, making dollar-denominated gold and silver more expensive for global buyers. Higher yields increase the cost of holding non-yielding metals like gold and silver. Traders also reduced bets on near-term US Federal Reserve rate cuts, as signs of stronger inflation and higher yields reduced expectations of policy easing, strengthening the dollar further. Data from CME Group's FedWatch tool shows odds of a June rate hold rising above 60%, up from below 45% earlier, supporting the dollar and weighing on precious metals.
With markets attempting to assess whether the conflict will be prolonged or contained, some of the risk premium in precious metals appears to be cooling. As reported by The Economic Times, concerns over potential disruption in the Strait of Hormuz, through which about 20% of global oil shipments pass, had pushed investors toward defensive assets such as gold and silver. However, the current decline reflects investors reassessing the immediate risk premium associated with the ongoing geopolitical tensions, as the conflict continues to expand beyond initial targets. The Iran war has raised geopolitical tension and pushed up oil prices and gas prices, with higher energy costs fueling inflation concerns in markets.
From a technical perspective, Jateen Trivedi, VP Research Analyst at LKP Securities, said gold continues to maintain a strong bullish structure as long as it holds above ₹1,64,000, which now acts as a crucial support zone. According to The Economic Times, on the higher side, ₹1,72,000 remains the immediate resistance; a sustained break above this level could open the path for further upside momentum. Ponmudi R from Enrich Money noted that gold is currently in short-term consolidation but retains a positive bias, with robust buying interest persisting in the ₹1,58,000–1,62,000 demand band. Despite the current fall, some analysts remain positive, with BMI, a unit of Fitch Solutions, saying gold could reach above $5,600 an ounce if there is no sign of de-escalation in the Iran war.
The coming week remains heavy on US macroeconomic data, which could add further volatility to gold prices. As reported by The Economic Times, key upcoming data includes Manufacturing and Non-Manufacturing PMI, ADP Non-Farm Employment Change and Unemployment data. From a technical perspective, Trivedi noted that volatility is expected to stay elevated given geopolitical risks and macro data triggers. The outlook for precious metals will depend on two key factors: the trajectory of the US-Iran conflict and incoming US economic data that could shape expectations around Federal Reserve policy. Investors should track movements in the US dollar, US Treasury yields, oil prices and Federal Reserve policy signals, with diversification across asset classes helping reduce exposure to sudden price swings.