MCX gold slips below ₹1.43L as dollar strength, yields weigh on bullion

Gold and silver prices slipped lower across Indian markets on Monday, July 13, as a constellation of headwinds—a climbing US dollar, rising Treasury yields, and surging crude oil—pushed investors away from precious metals and toward assets that actually pay returns.

On the Multi Commodity Exchange, August gold futures dropped ₹1,413 per 10 grams, a decline of 0.98%, settling at ₹1.42 lakh. This extended a steeper selloff from the previous week, when gold had fallen ₹3,900, or 2.65%, closing near ₹1.43 lakh per 10 grams. Silver tracked the same downward momentum, weighed by the same global forces that were reshaping investor appetite across commodity markets.

The immediate trigger was geopolitical: fresh military exchanges between the United States and Iran had rattled energy markets. Iran announced a temporary closure of the Strait of Hormuz, one of the world's most critical shipping channels for oil, sending crude prices higher. That move, paradoxically, deepened gold's weakness. Rising oil prices revived inflation concerns, which in turn reinforced market expectations that the US Federal Reserve would hold interest rates elevated for an extended period. When rates stay high, the dollar strengthens and Treasury yields climb—both conditions that drain appeal from gold and silver, which generate no interest income and sit idle in a portfolio while bonds and other yielding assets pull in returns.

Manav Modi, a commodities analyst at Motilal Oswal Financial Services, framed the dynamic plainly: the geopolitical tensions had boosted oil prices, which rekindled worries about energy-driven inflation, which then locked in expectations that the Federal Reserve would keep rates higher for longer. That sequence of reasoning had overwhelmed the traditional safe-haven bid that geopolitical risk usually provides to gold.

Globally, the pressure was equally visible. COMEX gold slipped below $4,100 an ounce. Pinky Yadav, a commodity analyst at Choice Broking, noted that the renewed tensions had strengthened the dollar itself and dampened broader investor sentiment. The week ahead would bring critical tests: the US Consumer Price Index and Producer Price Index, along with testimony from Federal Reserve Chair Kevin Warsh before Congress. Those data points and remarks would likely signal whether the Fed saw room to ease rates, which could restore some luster to non-yielding assets.

Silver faced an additional headwind. Beyond being a precious metal, it is also an industrial commodity, used in electronics, artificial intelligence hardware, and renewable energy systems. Concerns that industrial demand was softening had added downward pressure on top of the yield-driven selling that affected both metals.

Yet the long-term picture remained less dire. Tata Mutual Fund's outlook highlighted that central banks continued to accumulate gold, providing a structural bid beneath the market. Silver, too, had structural support from rising demand in technology and clean energy sectors. The fund house projected that 2026 would mark the sixth consecutive year of a global silver supply deficit. Both metals, however, would likely remain volatile in the near term as markets awaited clarity on US interest rate trajectories and dollar strength—the twin forces that had turned what should have been a safe-haven rally into a rout.