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Key Takeaways
Precious metals are under immense selling pressure today. Spot gold prices dipped by 2.2% to settle at $4,546.45 an ounce, their lowest since May 5, with a weekly decline of nearly 3.6%.
The silver price has been more severe, by roughly 13% from its highs. The reason behind this development is straightforward.
10-year benchmark US Treasury yields have risen to a new near one-year high, which makes the non-interest-bearing nature of gold more expensive.
“The rise in interest rates and US dollars is being fuelled by higher inflation expectations, partly due to tensions in the Gulf region and corroborated by the April PPI and CPI numbers published this week,” Rhona O’Connell, analyst at StoneX, said.
It means that gold prices have declined in India’s domestic market to around ₹1.31 lakh per 10 grams.
Prices reached a high point of ₹1.36 lakh per 10 grams previously. Although gold prices internationally have dipped, the stronger US dollar makes imports more costly.
Here is the present status of precious metals:
However, there is a silver lining for buyers in India. Cheaper gold can serve as a golden buying opportunity for Indians, especially in light of the upcoming festival season.
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India’s gold demand in terms of value remains strong, as higher prices prompt the purchase of lighter-weight items, as per data by the World Gold Council.
Some analysts see the metals as bullish, others as bearish.
Ole Hansen, head of commodity strategy at Saxo Bank, sees higher yields as a short-term threat, but the bigger picture is the deteriorating state of the US budget that is forcing investors to protect themselves against any potential “debt sustainability risks”.
Yet, the street continues to be bullish for the year ahead. For example, JP Morgan expects gold prices to hit $6,300, UBS forecasts gold prices to cross $6,200, Wells Fargo estimates gold prices between $6,100 and $6,300, while Goldman Sachs predicts that the yellow metal could touch $5,400 in 2026.
On the Indian front, experts recommend a balanced approach. It implies that you should not divest your existing investment but use the short-term dip to add gold in small lots.
According to the World Gold Council, if the Fed decides to keep rates steady or raise rates in 2026, there is a possibility that gold prices could correct between 5% and 20% from current levels.
The major factor behind the recent fall in gold prices is rising real yields. As long as US yields remain higher, gold and silver will continue facing pressure. However, the fundamentals for gold and silver remain intact in the long term.
Why are gold and silver prices falling even during geopolitical tensions?
Gold and silver are falling mainly because US Treasury yields and the US dollar are rising sharply. Higher bond yields make interest-bearing assets more attractive than precious metals, which do not generate returns.
What should investors do when gold and silver prices suddenly crash or surge?
Experts suggest maintaining a balanced approach. Instead of panic buying or selling, investors can add gold gradually during price dips and avoid overexposure to short-term market volatility.
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