Gold Market Volatility Persists Amid US-Iran Tensions, Potential Price Drop Below ₹1.50 Lakh

Gold Rate Today: Volatility Continues Amid US-Iran Tensions

The rally in gold prices, which had delivered historic returns in recent months, has slowed down in recent times. The bullion has turned volatile, especially since the onset of the US-Iran war. In a significant development, MCX Gold has risen ₹30,000 per 10 grams, translating to a stellar nearly 14% gain in just the first five months of 2026, building on the roughly 50% gain in 2025. In mid-January, domestic prices witnessed an explosive, unprecedented overnight surge, quickly smashing past ₹1,80,000. On the global front, spot gold breached the historic $5,600 per ounce mark for the first time.

The recent surge in gold prices can be attributed to various factors. However, lingering uncertainty surrounding a possible US-Iran agreement, along with reports of Israeli strikes in southern Lebanon, kept investors cautious. On Thursday, fresh US strikes on Iran strengthened the dollar and lifted oil prices, fuelling concerns over rising inflation and creating uncertainty around the interest rate outlook. The dollar climbed to a one-week high, making gold — which is priced in greenbacks — more expensive for holders of other currencies.

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A high-rate environment doesn't bode well for non-interest-yielding bullion. Although gold is traditionally viewed as a hedge against inflation, higher interest rates generally reduce the appeal of the non-yielding metal. Meanwhile, Federal Reserve Governor Lisa Cook said on Wednesday that she believes the US central bank should keep short-term interest rates unchanged for now. However, she added that rising prices driven by tariffs, the Iran conflict, and increased AI-related investments could prompt the Fed to raise rates if necessary.

Can gold prices fall below ₹1.50 lakh? According to Kaynat Chainwala, AVP - Commodity Research, Kotak Securities, if current diplomatic progress leads to a durable resolution, gold prices could rally toward higher levels; however, a down move is not implausible if the geopolitical situation deteriorates, the Fed turns more hawkish than expected, or dollar strength accelerates. Chainwala highlighted that 1,54,500 represents the first meaningful support, and a sustained break below that would open the door toward the 1,50,000 mark.

On the other hand, Renisha Chainani, Head of Research at Augmont, believes that a fall below ₹1.50 lakh in Indian gold prices anytime soon appears highly unlikely. Chainani highlighted that domestic prices have already rallied approximately 20% year-to-date in 2026, driven by a 7% rupee depreciation and the customs duty hike from 6% to 15% effective May 13, 2026. While Q1 2026 jewellery demand fell 23% and ETF flows slowed, central bank buying rose 2% and aggregate demand still grew 2%, keeping structural bullish drivers intact.