Gold Price Dips on MCX Amid Inflation Fears Fuelled by Rising Crude Oil Prices

Gold Prices Drop Amid Crude Oil Concerns and Monetary Tightening Fears

The gold rate on the Multi Commodity Exchange (MCX) dropped on Monday morning as higher crude oil prices stoked inflation concerns and fueled worries of possible near-term monetary tightening. The MCX gold June futures were down 0.43% at ₹1,57,858 per 10 grams, while the MCX silver July futures were down 1.24% at ₹2,68,511 per kg around 9:05 am.

Higher crude oil prices increased demand for the dollar, driving the dollar index up by more than 0.10%. A stronger dollar makes gold denominated in U.S. dollars more expensive for buyers in other currencies, weighing on demand for the yellow metal. The crude oil benchmark Brent Crude jumped 2% to trade above the $111 per barrel after a drone attack near a nuclear power plant in the UAE, which flared up hostilities in West Asia.

US President Donald Trump on Sunday warned Iran to act fast as both sides have not been able to settle their conflict, and the Strait of Hormuz, a critical waterway for global crude supply, remains effectively closed. Tensions between the US and Iran have kept oil prices elevated for more than two months, stoking fears of an inflation flare-up. Retail inflation in the US has posted its biggest annual jump in three years. If inflation rises further, the US Fed may decide to even hike rates.

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Gold, which is considered a hedge against inflation, tends to perform poorly amid elevated rates because it is a non-yielding asset. According to Master Capital Services, crucial support has shifted to ₹1,57,100, which aligns with previous structural peaks, followed by a deeper systemic floor at ₹1,56,000.

On the upside, Master Capital Services Chief Research Officer Ravi Singh said that immediate resistance is pegged at ₹1,61,000; a sustained close above this level is required to confirm the next leg of the bull run. "As immediate Iran-Israel tensions show signs of simmering rather than escalating, some of the safe-haven premium is being unwound. However, with domestic supply tightened by the 15% import duty, MCX gold continues to maintain a distinct premium, providing a solid foundation even as global spot prices navigate shifting macro headwinds," said Singh.

According to Prithvifinmart Commodity Research, gold has support at $4,515 and $4,470, while resistance is at $4,600 and $4,640 per troy ounce, and silver has support at $75.50 and $72, while resistance is at $80 and $82.80 per troy ounce in today's session.

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