Global gold prices fell sharply on Monday, hitting their lowest level in more than a month as escalating geopolitical tensions in West Asia pushed crude oil prices higher, intensifying inflation concerns and strengthening expectations that global central banks could keep interest rates elevated for longer.

Key Highlights

• Gold prices dropped sharply as rising oil prices fuelled inflation concerns and strengthened rate hike expectations.
• City-wise bullion rates declined across Delhi, Mumbai and Chennai as global market sentiment weakened.

Spot gold declined 1.1% to $4,488.99 per ounce as of 0052 GMT, marking its weakest level since March 30. US gold futures for June delivery also slipped 1.5% to $4,493.30 per ounce, reflecting mounting pressure on the precious metal as investors recalibrated expectations around monetary tightening.

Oil Rally Dampens Gold’s Safe-Haven Appeal

The decline followed renewed tensions in the Middle East after a drone strike triggered a fire at a nuclear power facility in the United Arab Emirates, while Saudi Arabia reported intercepting three drones. The developments have reignited fears of broader regional instability, pushing crude oil prices to a two-week high.

The surge in oil prices has raised fresh concerns over imported inflation globally, reinforcing speculation that the US Federal Reserve may delay rate cuts and potentially consider another hike before the end of the year.

According to CME Group’s FedWatch Tool, markets are now pricing in nearly a 50% probability of a US Federal Reserve rate hike by December, significantly weighing on bullion sentiment.

“Higher crude prices directly feed inflation expectations, which often prompts central banks to maintain tighter monetary conditions. That reduces the attractiveness of non-yielding assets like gold,” market analysts noted.

India Gold Prices Edge Lower

Domestic bullion prices also softened in early Monday trade.

• 24-carat gold fell by Rs 10 to Rs 1,56,920 per 10 grams
• 22-carat gold slipped by Rs 10 to Rs 1,43,840 per 10 grams
• Silver prices declined by Rs 100 to Rs 2,79,900 per kilogram

In key metro cities:

24-carat gold prices (10 grams):

• Delhi: Rs 1,57,070
• Mumbai: Rs 1,56,920
• Kolkata: Rs 1,56,920
• Hyderabad: Rs 1,56,920
• Chennai: Rs 1,60,900

22-carat gold prices (10 grams):

• Delhi: Rs 1,43,990
• Mumbai: Rs 1,43,840
• Kolkata: Rs 1,43,840
• Bengaluru: Rs 1,43,840
• Hyderabad: Rs 1,43,840
• Chennai: Rs 1,47,490

Silver prices (1 kg):

• Delhi, Mumbai, Kolkata: Rs 2,79,900
• Chennai: Rs 2,89,900

India Raises Gold and Silver Import Duties

In a major step to protect foreign exchange reserves and stabilise the weakening rupee, the Indian government has increased gold and silver import duties to 15% from 6%, including a 10% basic customs duty and 5% Agriculture Infrastructure and Development Cess (AIDC).

Also Read: India Hikes Gold & Silver Import Duty to 15% to Support Forex Reserve

The move is aimed at curbing non-essential precious metal imports and narrowing the widening trade deficit amid elevated crude prices and geopolitical uncertainty in West Asia. Industry experts believe the higher duties could dampen domestic bullion demand as prices remain near record highs, though it may also revive smuggling risks. The decision follows Prime Minister Narendra Modi’s recent call for reduced gold purchases and comes after bullion imports had already dropped to near 30-year lows due to tighter tax measures introduced earlier.