Gold Price Crash: Yellow metal extends fall after worst week in 43 years. More pain or time to buy the dip?

Gold prices extended their slide on Monday, dropping another 2% to $4,352 per troy ounce following their steepest weekly loss since 1983. The selloff comes as the war in West Asia has driven oil prices up nearly 50%, clouding the outlook for rate cuts and intensifying inflation concerns.

The decline that followed the steepest slide in 43 years gathered pace as the dollar strengthened and bond yields climbed, after a CBS report indicated that the US may be preparing to deploy ground forces into Iran, Bloomberg reported. Markets have since ramped up expectations of tighter policy, with traders now pricing in a 50% chance of a rate hike by October. Higher interest rates tend to weigh on gold, as the metal offers no yield.

Despite its safe-haven appeal, gold has now fallen every week since the US and Israel launched strikes on Iran last month. The pullback has coincided with a stronger dollar and broad risk aversion, as investors reassess the impact of elevated energy prices on inflation and global growth.


Investors remain on edge. Over the weekend, US President Donald Trump warned Iran to reopen the Strait of Hormuz “fully, without threat” within 48 hours, or face strikes on its power plants, starting with its largest facility. Tehran responded by cautioning that any attack on its fuel infrastructure would trigger retaliation targeting energy, information technology and desalination assets linked to the US-Israel presence in the region.

The conflict has already hit major energy installations in the Gulf and severely disrupted shipping through the Strait of Hormuz, a critical route that carries about 20% of global oil and liquefied natural gas flows.

Should investors buy this dip?

Ponmudi R, CEO of Enrich Money, says that MCX Gold opened with a gap-down and is currently holding above the Rs 1,36,000 support zone, reflecting weak global cues and limited recovery strength. On the upside, Rs 1,39,000–Rs 1,40,000 remains the immediate resistance band. A sustained move above this zone could trigger a recovery toward Rs 1,43,000–Rs 1,46,000. On the downside, support is placed at Rs 1,34,000–Rs 1,35,000. A breakdown below this level could accelerate profit booking toward Rs 1,30,000. Overall, the near-term bias is turning negative, with prices trading below key moving averages and volatility expected to remain elevated due to macro uncertainty.

“Gold fell below $4,400/oz as the ongoing Middle East conflict intensified inflation fears, while major economies face pressure to boost liquidity, including through gold sales, to offset the war’s impact,” Jigar Trivedi, Senior Research Analyst and IndusInd Securities, said.

Also read: Silver crashes Rs 14,000/kg, gold tanks Rs 7,000 as rising oil prices fuel inflation worries. What should investors do?

He added that Iran war shows little sign of easing, with President Donald Trump threatening strikes on Iranian power plants if the Strait of Hormuz is not reopened, while Tehran warned it would target key US and Israeli assets across the region if its energy facilities were hit. Last week, gold dropped over 10% as surging oil prices fueled inflation concerns, prompting markets to price in a prolonged pause or potential rate hikes from major central banks. Traders are anticipating a possible Federal Reserve rate increase toward year-end amid fears of persistent inflation. The ECB, BOE and BOJ also kept rates unchanged last week but signalled readiness to tighten policy further if inflationary pressures persist. On the MCX, gold April futures may drop to Rs 141,000/10g, as sentiment is weak in global markets as well.

Manav Modi of Motilal Oswal suggests that these developments have significantly heightened concerns about energy-driven inflation, a major factor dragging gold lower in recent weeks. Markets now expect that sustained high oil prices could force central banks to adopt a more hawkish stance, limiting the appeal of non-yielding assets like gold.

This follows the Fed’s recent decision to hold rates steady while highlighting inflation risks, alongside similar hawkish signals from the ECB and BOE, while the RBA has already hiked rates. Overall, the transition from rate cuts to potential hikes amid persistent inflation fears has significantly pressured gold prices despite ongoing geopolitical uncertainty.

Comex gold continues to trade below key short-term moving averages, hovering within the 4,367–4,320 support zone after a sharp recent correction. While the broader trend remains bearish, ongoing geopolitical tensions are providing intermittent safe-haven support, preventing a deeper downside in the immediate term. On the upside, the $4,400–$4,500 range remains a critical resistance band.

Also read: Rupee hits all-time low of 93.84 vs USD amid Mideast tensions

A sustained move above $4,650 could extend the rally toward $4,850–$4,900, where stronger supply is expected. On the downside, a break below $4,250 could accelerate weakness toward $4,100–$4,150. The structure remains cautious as long as prices trade below key resistance zones.

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