MCX gold, silver drop as Iran tensions spur dollar, rate fears
Indian gold and silver futures fell sharply on Monday as escalating US-Iran military strikes pushed crude oil and the dollar higher, reviving expectations for aggressive central bank tightening.
Indian precious metals futures faced heavy selling pressure on Monday morning. Gold and silver prices on the Multi Commodity Exchange dropped sharply as geopolitical risk reshaped global macroeconomic expectations.
By 9:10 am on July 13, MCX gold August futures had fallen 1.16% to ₹1,41,820 per 10 grams. The silver contract for September delivery fared worse, plunging 2.34% to ₹2,17,448 per kg.
The selloff was triggered by a 4% surge in crude oil prices following US military strikes against Iran. CENTCOM stated it hit dozens of targets on July 12 to “degrade Iran’s ability to continue attacking international shipping flowing through the Strait of Hormuz.”
Tehran reported projectiles hitting Qeshm Island and announced the closure of the vital waterway. The resulting oil price shock boosted the US dollar index by 0.30% to 101.22. A stronger greenback makes dollar-denominated gold more expensive for international buyers, prompting demand fatigue.
Beyond currency effects, the oil spike revived inflationary concerns and expectations of aggressive monetary tightening by the Federal Reserve and other central banks. Because precious metals do not yield interest, they typically suffer when borrowing costs are expected to rise. This dynamic offsets their usual role as an inflation hedge.
Market participants are now looking ahead to this week's US economic calendar for further direction. Federal Reserve Chairman Kevin Warsh is scheduled to deliver his first semiannual testimony before Congress, alongside releases of June CPI, PPI, and retail sales data.
Volatility is expected to persist across both metals. "We suggest that long-term investors could accumulate gold and silver in a staggered way in this market's fall, but traders must wait for some stability in the markets," said Manoj Kumar Jain of Prithvifinmart Commodity Research.
For international spot markets, Jain identified gold support at $4,074 and $4,040, with resistance at $4,144 and $4,180 per troy ounce, while silver has support at $59.10 and $57.70 against resistance at $61.20 and $62.40. On the domestic MCX, he pegged gold support at ₹1,42,400 and ₹1,41,100, with resistance at ₹1,44,400 and ₹1,45,550. MCX silver has corresponding support at ₹2,20,000 and ₹2,16,600, with resistance at ₹2,26,000 and ₹2,28,800.
