Gold prices faced significant selling pressure on May 1, 2026, with MCX gold futures for June delivery declining as much as 0.90% or ₹1,369 per 10 grams to the day's low of ₹149,742. According to Mint, prices recovered some losses and were down 0.57% at ₹150,255 around 5:55 pm. Internationally, US spot gold was down 1.1% at $4,568.82 per ounce and was on track for a weekly loss of 1.2%, while US gold futures for June delivery fell 1.1% to $4,579.70. The metal was on course for a weekly decline of about 2% and hit a one-month low on Wednesday, marking a continuation of the three-day decline that began after the Federal Reserve kept US interest rates unchanged as expected.
Brent crude prices have surged nearly 6% for the week and WTI crude by 12%, creating significant inflationary pressure that is impacting interest rate expectations. As reported by Mint, since the start of the year, Brent prices have nearly doubled, raising global growth and inflation concerns. US inflation accelerated in March as the US-Iran war resulted in higher gasoline prices, reinforcing expectations that the Federal Reserve could keep interest rates on hold well into next year. The U.S. Personal Consumption Expenditures Price Index jumped 0.7% last month, the largest gain since June 2022, which was in line with economists' expectations. This hot inflation data has created a classic policy trap, with Fed officials noting the war continues to cloud the economic outlook and presents risks to both inflation and activity.
The Fed's decision to maintain rates at 3.5%-3.75% was directly influenced by concerning inflation data that contradicted market expectations. According to CoinDesk, February's producer price index (PPI) rose 0.7% month over month, more than double the forecast, while yearly headline PPI hit 3.4%, above expectations. This hot data showing persistent wholesale inflation has created a classic policy trap, with Fed officials noting the war continues to cloud the economic outlook and presents risks to both inflation and activity. The latest Fed decision was a split 8-4 vote with Governor Stephen Miran and three other dissenters - Beth Hammack, Neel Kashkari, and Lorie Logan - who supported maintaining the target range but opposed including an easing bias in the statement. As reported by Mint, since the start of the Middle East conflict, gold prices have eased 5.55% as the yellow metal faces pressure in a high-interest-rate environment.
The Federal Reserve's decision was part of a broader trend of central banks maintaining rates, with the European Central Bank and the Bank of England keeping interest rates unchanged on Thursday, as expected, following holds earlier in the week by the Federal Reserve and the Bank of Japan. According to The Hindu BusinessLine, all central banks signalled inflation concerns in their recent decisions. This extended pause signals prolonged cost for risk capital, directly pressuring assets like Bitcoin that thrive on cheap liquidity. While gold is traditionally seen as a hedge against inflation, elevated interest rates aimed at curbing price pressures tend to weigh on demand for the non-yielding metal, as noted by The Hindu BusinessLine.
Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities, expects gold to remain volatile in the near term with support near ₹148,000 and resistance around ₹152,000. According to Mint, Ponmudi R, CEO of Enrich Money, noted that the near-term bias remains bearish-to-cautious, weighed down by dollar demand and evolving geopolitical developments. ASK Private Wealth has turned neutral on the yellow metal after remaining overweight for almost two years amid rising volatility and weakening predictive signals from traditional indicators. Carsten Menke, Head Next Generation Research at Julius Baer, noted that gold prices fell as oil prices rose, suggesting the market fears increasing inflation and potential central bank reaction more than rising growth risks. Deutsche Bank recently predicted that gold's share in global central bank reserves could increase to 40%, up from around 30% currently, with calculations indicating gold prices could climb to $8,000 an ounce within five years, implying nearly 80% upside from current levels.
