Gold Price Declines on MCX Amid Profit Booking, US-Iran Conflict Fuels Inflation Fears

Gold Price Drops Amid Uncertainty Over US-Iran Deal

The gold price on the Multi Commodity Exchange (MCX) dropped on Tuesday, 26 May, morning due to profit booking as persisting uncertainty over a potential US-Iran deal keeps oil prices up, stoking inflation fears and raising the possibility of interest rate hikes.

MCX gold June futures were 0.24% down at ₹1,58,699 per 10 grams, while MCX silver July futures were 1.22% down at ₹2,73,349 per kg around 9:10 am. This decline comes after Brent Crude prices jumped by 1% to trade near $98 per barrel on Tuesday morning, driving the dollar index higher and fuelling concerns about a spike in inflation.

Oil prices have been on the rise following US forces conducting strikes in southern Iran against targets, according to media reports. Meanwhile, negotiations with Iran are ongoing, but they are reportedly not going smoothly. Secretary of State Marco Rubio noted that there's a lot of back-and-forth over the specific language in the initial document.

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Higher inflation prints may lead to interest rate hikes in major economies worldwide, including the US and India. While gold is considered a hedge against inflation, it tends to weaken during periods of monetary tightening because it is a non-yielding asset.

Heightened uncertainty in the Middle East keeps investors cautious about inflation risks, weighing on gold prices. US President Donald Trump has said talks with Tehran were progressing well, but warned that additional attacks could follow if negotiations broke down.

Analysts have provided the following predictions for gold prices on the MCX:

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• Jigar Trivedi, Senior Research Analyst at IndusInd Securities, predicts that MCX gold June futures may drop to ₹1,58,800.
• Ravi Singh, Chief Research Officer (Research) at Master Capital Services, believes that immediate support for gold is placed near ₹1,57,500, followed by a stronger base around ₹1,54,000.
• Manoj Kumar Jain of Prithvifinmart Commodity Research said gold has support at $4,522 and $4,484, while resistance is at $4,610 and $4,640 per troy ounce, and silver has support at $76.60 and $74, while resistance is at $80.40 and $82.80 per troy ounce in today's session.

On the MCX, gold has support at ₹1,58,200 and ₹1,57,700 and resistance is at ₹1,59,850 and ₹1,60,600, while silver has support at ₹2,73,300 and ₹2,70,000 and resistance is at ₹2,80,000 and ₹2,83,350, according to Jain.