Gold drops Rs 1,000/10 gms; silver falls 0.5% as Iran-US tensions boost dollar strength: What lies ahead?

Gold and silver prices opened slightly lower on the Multi Commodity Exchange of India (MCX) on Monday, as the dollar strengthened amid rising hostilities in the oil-rich Middle East, strengthening the US dollar.

Gold futures with June expiry dropped 0.68% (Rs 1,000 per 10 grams) to trade at Rs 1,46,255 per 10 grams in the early trading hours of Monday on MCX. The contracts with April and August expiries meanwhile fell around 0.6% each. Silver futures with May expiry on MCX meanwhile declined around 0.5% (Rs 1,059 per kilogram) to trade at Rs 2,26,895 per kg.

In the international market, spot gold fell over 1% to $4,439.45 per ounce, as of 0102 GMT. US gold futures for April delivery dropped 1.2% to $4,470.30 per ounce. ⁠Gold has crashed around 16% so far this month, marking its steepest monthly fall since October 2008, pressured by a stronger US dollar, which has gained more than 2% since the US-Israeli war on Iran began on February 28. Spot silver fell 1.3% to $68.67 per ounce.


The Donald Trump-led US administration is preparing for weeks of ground operations in Iran, the Washington Post reported yesterday. US Central Command said on X that it has deployed 3,500 Marines and sailors to the Middle East aboard the USS Tripoli, marking the largest American military buildup in the region in two decades.

Iran's parliament speaker, meanwhile, warned that the country’s forces were "waiting for American soldiers" and would "rain fire" on any US troops attempting to enter Iranian territory. In his message, reported by Iranian state media, Ghalibaf also said: "The enemy signals negotiation in public, while in secret it plots a ground attack". Additionally, Yemeni Houthis launched their first attacks on ⁠Israel over ‌the weekend, widening the ongoing war and adding to inflation woes.

The war, which began earlier this month with US-Israeli strikes killing Iran’s former supreme leader Ayatollah Ali Khamenei and resulting in massive retaliation from Tehran, has spread across the Middle East. Fear now rises for a ground offensive and the entry of Yemen's Iran-aligned Houthis.

Pakistan said it was preparing to host "meaningful talks" to end the prolonged war in the coming days, although Iran said it is ready to respond if the United States launches a ground operation.

The rising uncertainties and no relief in war pushed the dollar higher amid a rise in risk-off sentiment. A stronger dollar makes dollar-denominated bullion less attractive for holders of other currencies. Additionally, oil prices continue to rally, with Brent crude futures jumping around 4% to near the $120 per barrel mark, further stoking inflation worries and erasing hopes for potential interest rate cuts by the US Federal Reserve.

Meanwhile, US bond yields also rose. Higher bond yields increase the opportunity cost of holding non-yielding assets, which often results in some investors reallocating money away from gold and silver.

Gold and silver saw a spectacular rally in 2024 and 2025, as tariff wars and regional conflicts embedded a “geopolitical risk premium” into the prices of the precious metals, and strong sentiment triggered a skyrocketing rally. However, both gold and silver have seen sharp corrections in 2026 so far, despite ongoing geopolitical tensions spurring hopes for a rally in safe-have assets.

What lies ahead?

The sharp rise in crude continues to signal underlying market stress and inflation risks, said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities. Despite the bounce seen in gold during the last session, sentiment remains cautious as macro triggers still favor higher interest rates, he added.

“Technically, support is seen near Rs 1,42,000, while resistance is placed around Rs 1,46,500. Overall, gold is likely to stay volatile with limited upside unless clarity emerges on inflation and geopolitics,” the analyst said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)