Gold and silver prices experienced a significant downturn on Tuesday, May 26, tracking a broader weakness across global bullion markets. The sharp decline on the Multi Commodity Exchange (MCX) was primarily driven by escalating geopolitical tensions, particularly in West Asia, coupled with a strengthening rupee and persistent concerns over inflationary pressures fueled by rising crude oil prices.
Domestic Bullion Markets Witness Sharp Losses
On the MCX, gold prices fell by approximately ₹1,000 during intraday trade, settling near ₹1.58 lakh per 10 grams. Silver faced even steeper losses, dropping over ₹5,000, or nearly 1.8%, to trade around ₹2.71 lakh per kilogram. This domestic trend mirrored the weakness observed in international markets.
Globally, spot gold fell close to 1%, trading around $4,530 per ounce, while spot silver declined by almost 2% to fall below the $77-per-ounce mark.
Geopolitical Tensions and Crude Oil Prices Weigh Heavily
Investor sentiment turned cautious following reports of renewed military tensions involving the United States and Iran. US forces reportedly targeted missile launch sites and mine-laying vessels in southern Iran, raising fears of a prolonged conflict in the region. This development dampened earlier optimism regarding potential diplomatic breakthroughs, despite previous statements from US President Donald Trump suggesting progress in negotiations.
Simultaneously, crude oil prices surged, adding another layer of uncertainty to global financial markets. Brent crude approached $98 per barrel, while US West Texas Intermediate (WTI) crude traded around $92 per barrel. Rising oil prices intensify concerns over energy-driven inflation, strengthening expectations that central banks may maintain tighter monetary policies for longer periods.
Expert Insights on Market Dynamics
Manav Modi, a Commodities Analyst at Motilal Oswal Financial Services, noted that gold prices reversed earlier gains as geopolitical tensions and inflation concerns resurfaced. “The renewed escalation pushed crude oil prices higher after a week of declines, reigniting concerns over energy-driven inflation and keeping markets cautious,” Modi stated. He added that rising crude prices also supported the US dollar, further pressuring non-yielding assets like gold.
Providing a technical outlook, Ponmudi R, CEO of Enrich Money, observed that MCX Gold opened with a mild gap down, reflecting a cautious undertone. He indicated that immediate resistance for MCX Gold is positioned at ₹1,59,000–₹1,59,500, with a sustained move above this level needed to push prices toward ₹1,60,000–₹1,60,500. Conversely, a break below the ₹1,58,000–₹1,57,500 range could trigger further weakness toward ₹1,56,000–₹1,55,000. Ponmudi concluded that the near-term bias remains cautious to mildly positive, awaiting a decisive breakout.
Investors are now closely watching upcoming US economic data, including GDP and inflation readings later this week, for fresh signals regarding the Federal Reserve’s interest rate trajectory and broader market direction.