Gold price outlook: MCX gold rate falls to ₹99,000 per 10 grams amid Israel-Iran war. What should be trading strategy?

Gold Prices Tumble Amid Geopolitical Shock

Gold prices witnessed a sharp drop on India’s Multi Commodity Exchange (MCX), falling to ₹99,000 per 10 grams as of June 21, 2025. The correction came as a surprise for many retail and institutional investors, given the backdrop of intensifying Israel-Iran tensions which typically fuels demand for safe-haven assets like gold.

However, analysts suggest this move reflects complex market dynamics involving profit booking, rising bond yields, and fluctuating dollar strength, all of which are reshaping investor behavior in the commodities space.

Why Is Gold Falling Despite Geopolitical Risk?

Traditionally, gold prices soar during geopolitical turmoil, but the current decline signals that market psychology is shifting.

“Investors had already priced in a geopolitical premium during the initial wave of Israel-Iran conflict news. Now, as the war drags on without significant escalation or resolution, traders are taking profits at the top,” said Manoj Jain, Head of Commodity Research at Prithvi Finmart.

Adding to the pressure, US bond yields have risen due to hawkish commentary from the Federal Reserve, which hinted at fewer rate cuts in 2025 than previously expected. A stronger US dollar, which inversely affects gold prices, is also contributing to the recent fall.

MCX Gold: Technical Picture

On the technical front, gold has slipped below key support levels on the MCX.

“₹99,000 is a critical psychological support zone. If gold breaks below this level on a closing basis, it may test ₹97,500 next. On the upside, ₹1,01,200 acts as a short-term resistance,” said Anuj Gupta, Head of Commodities & Currency at HDFC Securities.

MCX Gold futures for August delivery opened weaker and have declined by over 2.3% in the past week, making this one of the steepest declines in recent months.

What Are Global Gold Prices Indicating?

On the global front, spot gold prices dropped to $2,280 per ounce, after testing highs above $2,360 earlier this month. Analysts believe that part of the correction is being driven by investor rotation into equities and oil amid rising inflation and commodity-specific trade bets.

“We’re seeing a shift from safe-haven hoarding to tactical positioning. With equities still resilient, and oil prices volatile, gold is facing some near-term abandonment,” said Alice Harper, Senior Analyst at GoldCore Research, London.

Impact on Indian Gold Investors

Indian investors are particularly sensitive to MCX prices due to the rupee’s performance and import duties. The recent appreciation of the rupee against the US dollar has made imported gold cheaper, thereby amplifying the domestic price correction.

Jewellery demand, however, remains sluggish post the wedding season, and high volatility has kept retail investors cautious.

Trading Strategy: What Should Investors Do Now?

Given the current dynamics, a cautious and disciplined approach is recommended.

Short-Term Traders:

• Look for bounce-back near ₹97,500-₹98,000 levels for short-covering opportunities.

• Use tight stop-losses due to high volatility.

• Avoid overleveraging as geopolitical headlines can cause sudden swings.

Medium-Term Investors:

• Use declines to accumulate in a staggered manner between ₹97,000–₹99,000.

• Watch global cues like US inflation data, central bank commentary, and further updates from the Middle East.

Long-Term Allocators:

• Gold remains a robust portfolio diversifier.

• Allocate 10–15% of total portfolio in gold via ETFs, sovereign gold bonds, or digital gold for risk mitigation.

“Despite this dip, gold’s long-term bullish narrative remains intact. It continues to serve as a hedge against currency devaluation, inflation, and systemic risk,” said Kunal Shah, Head of Commodities at Nirmal Bang.

Outlook: Recovery or Further Slide?

While near-term risks may weigh on sentiment, many experts believe gold’s longer-term fundamentals are resilient.

• Central bank buying remains strong, especially from China, India, and Turkey.

• Monetary policy uncertainties globally could bring back gold into favor.

• If the Israel-Iran conflict escalates or drags in other regional players, safe-haven demand could re-emerge quickly.

“If gold sustains above ₹99,000 in the coming sessions, a quick rebound to ₹1,01,500 is likely. However, if it breaches ₹97,500, a more pronounced correction cannot be ruled out,” added Anuj Gupta.

Conclusion

Gold’s sharp fall to ₹99,000 per 10 grams on the MCX underscores the volatile intersection of geopolitics and financial markets. Despite the traditional role of gold as a hedge, market participants are navigating a more nuanced reality influenced by central bank policy, macroeconomic data, and shifting investor sentiment.

For traders, this presents both risks and opportunities, depending on discipline and timing. For long-term investors, the yellow metal continues to offer value as a defensive asset, especially during periods of heightened uncertainty.

As the Israel-Iran conflict unfolds and economic data continue to surprise, gold is likely to remain in the spotlight — as both a barometer of fear and a tool for financial resilience.