Summary of this article
Gold prices fell as investors shifted towards US Treasury bonds amid geopolitical tensions.
Silver prices dropped after crude oil surge revived inflation and higher interest rate fears.
Stronger US dollar increased pressure on gold and silver, pushing prices lower globally.
Gold and silver prices saw a sharp dip in the domestic futures market and physical retail hubs on July 13, 2026. Gold Futures fell on the Multi Commodity Exchange (MCX) in early trade. Notably, Gold Futures with August 5, 2026 expiry declined 1.33 per cent to trade at an early low of Rs 1,41,557 per 10 grams. Silver faced an even steeper drop, with MCX Silver September futures crashing by more than 2.40 percent to Rs 2,17,277 per kilogram, extending the drop for the fourth straight session.
The decline in gold and silver prices was also mirrored in physical markets across India. Retail prices for 24 karat pure gold slipped by 1.31 per cent to Rs 14,291 per 10 grams. Physical silver also fell to Rs 2.35 lakh per kg level, indicating a decline of 2.08 per cent. As physical prices track international spot prices and domestic futures, sell-offs in the international market are likely to have forced physical retail rates down simultaneously.
Why Are Gold and Silver Prices Falling?
The ongoing crash in precious metal is driven by developments in the geopolitical conflict in West Asia, surging crude oil prices, renewed inflation fears, and a strengthening dollar.
US and Iran Conflict
The escalation of hostilities between the US and Iran over the weekend affected market dynamics. As reports emerged that the understanding between Washington and Tehran had collapsed, both sides exchanged strikes. Typically, gold is considered a safe haven asset which holds its value during times of conflict. However, the prevailing conflict in West Asia is working against precious metals, as instead of buying gold, investors are shifting capital towards yield generating assets, such as US treasury bonds.
Surging Crude Oil Prices
Due to the resumption of conflict in the Strait of Hormuz, energy costs are expected to increase. With Iran declaring the strategic waterway closed, global crude oil prices have surged by nearly 4 per cent, inching close to $80 per barrel.
Oil is the primary driver of global manufacturing and transportation costs, and the sudden surge directly impacts the economic outlook. Investors recognise that expensive oil acts as a massive tax on consumers and businesses, shifting focus away from precious metals and towards assets that directly respond to energy sector fluctuations.
Renewed Inflation and Higher Interest Rates
The massive spike in crude oil prices have instantly revived global inflation fears, threatening to undo months of economic stabilisation. To combat this potential inflationary shock, market participants now expect the US Federal Reserve to not go ahead with any plans for near term rate cuts and instead maintain a strict policy of keeping interest rates higher for longer.
Precious metals like gold and silver are non-yielding assets, meaning they pay no interest to those holding them. When central banks keep interest rates elevated, the yield on safer investments like US Treasury bonds become more lucrative, making institutional investors pivot their capital towards these yield bearing assets.
Strong Dollar
A strengthening dollar is also expected to further compound the intense pressure on gold and silver. Geopolitical uncertainty and the firm prospect of higher interest rates have pushed the US dollar index up to multi-week highs above 101. As gold is priced in dollars on the international market, a strengthening dollar makes the metals significantly more expensive for buyers holding other currencies like the rupee. This often triggers sell-offs in major consuming nations and pulls domestic prices down.
