Gold and Silver prices slide as rising crude oil rates shake bullion market

Gold and silver prices opened sharply lower on Monday as rising crude oil prices and fresh geopolitical tensions triggered heavy pressure in the bullion market. Traders across India tracked the sudden decline closely after investors shifted focus toward inflation risks and possible interest rate hikes.

On the Multi Commodity Exchange, gold futures for June delivery slipped near ₹1.57 lakh per 10 grams. Silver futures for July delivery also recorded a steep fall and dropped below ₹2.67 lakh per kilogram during early trade.

The decline came after crude oil prices surged to their highest level in nearly two weeks. Market sentiment turned cautious after a drone strike near a nuclear facility in the United Arab Emirates intensified tensions in West Asia. Saudi Arabia also reported fresh drone interceptions, adding further uncertainty to global markets.

As oil prices climbed, investors feared higher transportation and manufacturing costs across economies. Consequently, many traders began expecting central banks, especially the US Federal Reserve, to maintain elevated interest rates for a longer period.

Bullion markets usually weaken when interest rates remain high because gold does not generate fixed returns like bonds or deposits. Therefore, many investors temporarily shifted money toward dollar-based assets and safer interest-bearing investments.

At the same time, recent policy decisions by the Indian government added pressure on the precious metals market. Last week, the Centre sharply increased customs duties on gold and silver imports. Soon after, authorities tightened silver imports further by moving the metal into the restricted category.

Under the revised policy, importers now require government licences before bringing silver into India. However, the rules continue to allow imports by export-oriented units and Special Economic Zone businesses under specific conditions.

Bullion traders in Delhi’s Chandni Chowk said customers slowed fresh buying after repeated price fluctuations over the past week. Several jewellers reported confusion among retail buyers who struggled to understand whether prices would rise again or continue falling.

In Mumbai’s Zaveri Bazaar, silver dealers described the market mood as tense. Some traders predicted temporary shortages if import restrictions continue for a longer period. Others said the tighter rules may increase premiums in domestic markets over the coming months.

Commodity analysts linked the recent volatility to both international and domestic developments. According to market experts, stronger inflation data from countries including India, China and the United States also pushed investors to rethink expectations around interest rate cuts.

Meanwhile, the US dollar and global bond yields strengthened further, which added pressure on gold prices worldwide. Analysts said investors now closely watch developments involving Iran, the Gulf region and global oil supply routes.

Traders also kept an eye on the Strait of Hormuz, one of the world’s most critical energy shipping corridors. Any disruption in the route could sharply increase crude oil prices and deepen inflation worries across major economies.

Despite the latest decline, some analysts believe long-term demand for gold may remain strong because investors still view bullion as a hedge during periods of global instability.

For now, however, jewellery buyers and bullion traders remain cautious. Frequent policy changes, geopolitical tensions and volatile crude oil prices continue to drive uncertainty across India’s precious metals market.