MCX gold and silver fall as Middle East conflict fuels Fed rate fears
Escalating US-Iran military strikes are overriding softer US inflation data, pushing MCX gold and silver lower on renewed expectations that the Federal Reserve will keep interest rates elevated.
Gold and silver prices on India's Multi Commodity Exchange traded lower on Thursday morning, bucking the typical safe-haven demand usually triggered by geopolitical crises. Around 9:10 am, MCX gold August futures fell 0.39% to ₹1,41,301 per 10 grams, while September silver futures dropped 0.44% to ₹2,19,650 per kg.
The declines were driven by a sharp reassessment of Federal Reserve policy expectations as US-Iran military tensions escalated. The US launched two new waves of strikes on Iranian military targets, with President Donald Trump threatening to expand attacks to power plants and bridges unless Tehran returns to negotiations. Iranian Foreign Ministry spokesperson Esmaeil Baghaei stated the country has no current plans for negotiations and will respond "firmly" to US attacks.
While the conflict initially supported crude oil, which later saw mild profit booking, the overarching market focus shifted to the inflationary impact of energy costs. Recent US economic data had actually pointed to disinflation, with June CPI easing to 3.5% from 4.2% in May and posting the first month-on-month decline since April 2020. June PPI also fell 0.3% month-on-month, the largest drop since April 2025.
However, analysts note that the potential for an energy price surge has effectively neutralized the bullish impact of softer inflation prints on bullion. "Rising energy prices have revived concerns that inflation could remain elevated, reinforcing expectations that the Fed may keep interest rates higher for longer," said Ravi Singh, Chief Research Officer at Master Capital Services. He noted that Fed Chair Kevin Warsh recently reiterated the central bank's commitment to its 2% inflation target.
The dollar index hovered near 100.5, adding further weight to precious metals. Traders are now closely watching key technical levels to navigate the shifting rate outlook. Singh identified ₹1,40,000 to ₹1,40,300 as immediate support for MCX gold, warning that a breach could accelerate losses toward ₹1,36,000. He recommends a "sell on rise" strategy as long as prices remain below ₹1,45,500.
Manoj Kumar Jain of Prithvifinmart Commodity Research pegged MCX gold support slightly higher at ₹1,41,000 and ₹1,40,250. For silver, Jain suggested a different approach, recommending buying in the ₹2,17,000 to ₹2,20,000 range with a stop loss below ₹2,14,000, targeting a move up to ₹2,24,000 and ₹2,26,600.
