Gold prices have fallen nearly 30% from their all-time high in January this year. Silver fell by more than 50%! At present, gold is trading at a seven-month low in the international market.In January 2026, gold prices reached $5595 – an all-time high – they are now trading below $4,000. Prices are down 7.6% year-on-year. On MCX, the decline has been lower – about 22% – mainly due to the increase in import duties.After a record-breaking surge for much of the past year, gold prices appear to be slowing down a bit. But why? Gold has always been seen as a safe haven asset in times of global uncertainty, but it has declined due to the US-Iran war, which is refusing to stop even as crude oil prices have fallen.
Why are gold prices falling?
Gold prices have fallen due to several macroeconomic factors, which is impacting bullion sentiment. The US–Iran war started a period that has not ended despite crude oil prices falling to pre-conflict levels. The US Federal Reserve’s tough stance and the strengthening dollar have reduced gold’s safe investment appeal.
mcx gold price trend
Praveen Singh, Head of Commodity at Mirae Asset Sharekhan, shares some of the key factors that led to the crash:
- Geopolitically motivated energy shocks, due to the Iran war, have renewed inflation concerns, leading to a sharp reassessment of interest rate expectations. Even before tensions in the Middle East escalated, markets were pricing in more than two rate cuts; This has now shifted towards expectations of a tightening of about 40 basis points by the end of the year, reflecting a more dovish policy outlook. The market expects the US Federal Reserve to raise rates in October this year and March next year.
- Why should that matter? This happens because gold is a non-yielding asset; There is no income from this. Rising rates make bonds more attractive and also strengthen the US dollar.
- Gold has also failed to benefit from safe-haven demand, as inflation concerns stemming from higher oil prices have instead fueled expectations of tighter monetary policy.
- Even as oil prices have eased, central banks remain cautious and are moving away from an accommodative stance to moderate inflation expectations.
- The US dollar index has strengthened to a multi-year high, putting further downward pressure on gold.
- The US economy’s low sensitivity to oil shocks has helped curb downside growth risks, limiting recession risks despite high energy prices. As a result, recession prospects over the next 12 months will remain subdued, reducing the urgency for safe-haven allocations.
- Continued ETF outflows reflect weak investor sentiment, with holdings falling by 3.6 Moz since the start of the conflict and net outflows of 1.63 Moz year-to-date.
- Increased price volatility and position-driven moves have also discouraged fresh buying interest.
When will gold recover?
Experts believe near-term volatility and rate hike decisions are impacting the gold price outlook.“In the near term, volatility may persist with corrective selling. However, the broader outlook remains positive, supported by potential economic slowdown, geopolitical risks and ultimately monetary policy easing. Prices may stabilize and recover as rate hike pressure eases and dollar strength eases,” Harish V, head of commodity research at Geojit Investments Ltd, told TOI.He feels that gold prices will take support around Rs 1.29 lakh per 10 grams.“In the international market, spot gold is likely to take immediate support near $3,850, while resistance is seen around $4,630. Similarly, in the domestic MCX market, prices are expected to take support near Rs 1,29,000 per 10 grams, while resistance lies at Rs 1,56,000. These levels indicate a range-bound movement in the near term, with any breakout on the back of US dollar strength. And depends on macroeconomic signals such as interest rate expectations.” They say.Vedika Narvekar, Research Analyst – Commodities & Currency, Anand Rathi Shares and Stock Brokers expect gold to trade in the range of Rs 1,35,000-1,54,000 per 10 grams on MCX in the third quarter of this calendar year.“Given the ongoing negotiations between the US and Iran and the recent decline in crude oil prices, we do not expect the (US Federal Reserve’s) tight guidance to be fully implemented,” she says. “Much will depend on the upcoming economic data, especially inflation and employment data. In the short term, after a sharp selloff, we cannot rule out the possibility of short covering. However, any upside in gold is likely to be limited to $4,250-4,360/oz range,” she tells TOI.Vedika Narvekar believes silver is also likely to see short-covering or relief rally, with spot market prices potentially touching $64 an ounce and Rs 2,25,000 per kg on MCX in the near future.“However, from a medium-term perspective, we expect silver to remain in a broad range of $52-68 an ounce in the spot market and Rs 1,95,000-2,56,000 per kg on MCX,” she says.On a weekly basis, commodity expert Manish Sharma says gold may still see 5-8% downside as continued strength in dollar index amid rising US yields is expected to keep pressure on gold prices in the coming weeks.This may support gold in the range of $3,740-3,580/oz, while the downside on MCX still remains at Rs 1,38,000-136,500 per 10 grams. In the August futures contract. He recommends accumulating gold as a 4-6% fall from current levels creates a long-term investment opportunity in the yellow metal.“Gold has historically risen an average of 1.5%-1.8% in August over the last 50 years. This summer rally is widely attributed to rising physical demand and conditions ahead of the festive and wedding season at the end of the third quarter in India,” he told TOI.(Disclaimer: The recommendations and views given by experts and analysts on the stock market, or any other asset class or personal finance management are their own. These opinions do not represent the views of The Times of India.)
