Gold prices have crashed approximately 30% from their all-time peaks reached in January 2026, with the yellow metal now trading at a seven-month low in international markets, according to a Business-Today report. Silver has fallen more than 50% from its peaks. In January 2026, gold hit a lifetime high of $5,595 per ounce; it is now trading below $4,000, down 7.6% year-to-date. On the MCX, the decline has been lesser at around 22%, largely due to a hike in import duties.
The trigger for the crash was the US-Iran war, which created a geopolitical-driven energy shock that translated into renewed inflation concerns, Business-Today reported. This prompted a sharp repricing in interest rate expectations: prior to the escalation in Middle East tensions, markets were pricing in more than two rate cuts; this has now shifted toward expectations of roughly 40 basis points of tightening by year-end, reflecting a more hawkish policy outlook. Markets now see the US Federal Reserve hiking rates in October 2026 and March 2027, according to Praveen Singh, Head of Commodities at Mirae Asset ShareKhan.
Drivers of the decline
Several macroeconomic factors are weighing on bullion sentiment. The strengthening US dollar — with the US Dollar Index hitting a multi-year high — has added downward pressure on gold. As a non-yielding asset, gold becomes less attractive when rate hikes make bonds more appealing and strengthen the dollar. Gold has also failed to benefit from safe-haven demand, as inflation concerns stemming from elevated oil prices have instead fueled expectations of tighter monetary policy, Business-Today explained. Even though oil prices have moderated, central banks remain cautious and are pivoting away from accommodative stances.
The US economy’s reduced sensitivity to oil shocks has helped contain downside growth risks, limiting recession fears despite higher energy prices. Consequently, recession probabilities over the next 12 months remain contained, reducing the urgency for safe-haven allocations. Continued ETF outflows reflect weakening investor sentiment: holdings have declined by 3.6 million ounces since the onset of the conflict, with net outflows of 1.63 million ounces year-to-date. Elevated price volatility and positioning-driven moves have also discouraged fresh buying interest, Business-Today reported.
Price outlook and key levels
Experts see near-term volatility continuing, with decisions on rate hikes influencing the outlook. Hareesh V, Head of Commodity Research at Geojit Investments Limited, told Business-Today that gold prices may stabilize and recover once rate hike pressures ease and dollar strength moderates. He identified key technical levels:
| Market | Support | Resistance |
|---|---|---|
| Spot gold (international) | $3,850 | $4,630 |
| MCX gold (per 10 grams) | ₹1,29,000 | ₹1,56,000 |
Hareesh V added that in the near term, prices are likely to move in a range, with any breakout dependent on macroeconomic cues such as US dollar strength and interest rate expectations. For commodity traders and analysts, the current environment suggests maintaining a cautious stance, with recovery predicated on a shift in monetary policy and a weakening of the dollar. The interplay between geopolitical risks and central bank actions will remain the primary focus for gold price direction in the coming months.
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