Gold fell nearly 1% to move below the ₹1.60 lakh per 10 grams mark. Silver contracts also came under pressure, hitting an intraday low of ₹2.65 lakh per kg.
In global markets, spot gold declined about 0.5–0.7% to around $4,505–$4,520 per ounce after touching a two-week high in the previous session. US gold futures for August delivery also fell over 1% to about $4,535 per ounce.
Spot silver, however, showed relative resilience, rising 0.5–0.7% to around $75.8–$76 per ounce.
The dollar index strengthened, making dollar-denominated bullion costlier for other currencies. At the same time, crude oil prices surged over 3%, adding inflation concerns and keeping investors cautious ahead of key geopolitical developments, including US–Iran ceasefire-related talks and ongoing tensions in the West Asia.
“Oil’s uptick in price, combined with the still-elusive US-Iran deal, is just enough to keep gold off balance at the start of the week,” said Tim Waterer, chief market analyst at KCM Trade.
Geopolitics, oil surge drive volatility
Sentiment in global markets remained fragile after reports of fresh military strikes between the US and Iran-linked forces, along with continued conflict escalation involving Israel and Hezbollah. Rising oil prices have revived inflation concerns, which in turn could support tighter monetary policy expectations in the US.
While gold is traditionally considered a hedge against inflation, higher interest rate expectations and rising bond yields tend to reduce its appeal as a non-yielding asset.
Import duty impact supports financial gold shift
Commenting on India’s gold market dynamics, Satish Dondapati, ETF Fund Manager at Kotak Mutual Fund, said the recent increase in gold import duty to 15% has already pushed domestic prices higher and boosted inflows into gold ETFs and gold mutual funds.
“The duty hike is expected to support the shift toward financial forms of gold such as Gold ETFs and Gold Funds,” he said.
He added that India imports around 800 tonnes of gold annually, with nearly 70% used for jewellery, while financial and investment demand accounts for about 28%. “A greater shift toward financial gold can help moderate pressure on the current account deficit and forex reserves,” he noted.
Dondapati also highlighted that Gold Trading Receipts and ETFs both provide market-linked exposure without physical ownership, though ETFs tend to offer higher liquidity.
On portfolio allocation, he suggested a 10–15% gold allocation in diversified portfolios amid geopolitical risks and equity market volatility, while advising staggered investments to manage price swings.
–With Reuters inputs