
Gold prices experienced a sharp decline on Thursday, with spot gold falling 0.5% to $4,039.40 per ounce as of 7:00 am, according to ET Now. This follows the previous session where spot gold prices declined nearly 3% and fell below the $4,000 mark. The latest drop extends the precious metals' decline for a fourth consecutive session, with gold futures for August 2026 delivery falling by ₹2,000 to ₹1,41,557 per 10 grams and silver futures for September 2026 delivery declining by ₹5,400 (2.5%) to ₹2,17,277 per kg on the Multi Commodity Exchange (MCX).
On the US Comex exchange, spot gold was trading around $4,091 per troy ounce, declining 0.55%, while silver was trading at $59.60 per troy ounce, losing nearly 1% around 6:05 am on 13 July, as reported by Mint. The international decline mirrored the domestic market weakness, with both metals under pressure from multiple bearish factors. However, recent data shows that COMEX gold speculators reduced their net long positions by 1,964 contracts to 114,854 in the week ended July 7, according to The Economic Times.
The latest decline in gold prices is attributed to fears of a closure of the Strait of Hormuz, which has intensified following US and Iranian forces exchanging heavy missile and drone assaults. The escalation has reached new heights with Iran targeting ships in the Strait of Hormuz, prompting the U.S. to launch another attack on Iran early Sunday after the country hit another ship in the vital waterway. Tehran has targeted U.S. facilities in states across the Gulf on Sunday and stated it had again closed the Strait of Hormuz, as reported by The Hindu BusinessLine. Iran's IRGC warned Monday of further incidents should the US's interference continue, with Iran warning vessels not to sail without its authorization. The US President Trump announced Monday on Truth Social the U.S. will again begin blocking ships coming in and out of Iran and will charge a 20% rate on all cargo shipped to provide safety and security for ships transiting through the Strait. As per Bloomberg estimates, a 20% charge would work out as about $32 million on a supertanker at current oil prices, far higher than the estimated $2 million tolls that would have been charged by Iran. Ship-tracking data from Kpler showed just six vessels passed through the strait on Sunday.
The ongoing geopolitical tensions have pushed crude oil prices higher, with Brent crude futures trading above $85 per barrel and WTI crude futures hovering around $80 per barrel, according to ET Now. Higher oil prices typically increase transportation and production costs, raising inflation concerns and increasing the possibility of tighter monetary policy from central banks. These inflationary pressures have increased expectations of a Federal Reserve rate hike in 2026, with markets now pricing in a higher probability of rate increases. Gold prices generally come under pressure when interest rates rise, as higher yields on interest-bearing assets increase the opportunity cost of holding non-yielding assets like gold. Investors often shift towards bonds and other fixed-income instruments during periods of higher interest rates, reducing demand for gold.
Despite geopolitical tensions, US economic data showed signs of easing inflation pressures, which provided some support to gold prices. According to US data, the Producer Price Index (PPI) declined 0.3% month-on-month in June, marking the first monthly decline since August 2025, as reported by ET Now. Meanwhile, core PPI increased 0.2% month-on-month. The fall in headline PPI indicated easing producer-level inflation, supporting expectations that interest rates could remain lower for longer, a factor that generally benefits non-yielding assets such as gold. Additionally, the US Dollar Index was trading around 100.51, with a weaker dollar making gold more affordable for buyers using other currencies, potentially boosting demand and providing support to bullion prices.