Gold Rate Today: MCX Gold Price Falls Below ₹97,000 per 10 Grams Amid India-Pakistan Conflict; US

Fed Policy Eyed

New Delhi | May 7, 2025 — In a volatile session marked by geopolitical anxiety and central bank speculation, gold prices on the Multi Commodity Exchange (MCX) slipped below the critical ₹97,000 mark per 10 grams. This decline, although modest, comes as a surprise to many market participants who expected gold to rally amid heightened tensions between India and Pakistan.

The pullback in the yellow metal reflects a complex confluence of global macroeconomic factors, hawkish sentiment from the U.S. Federal Reserve, and cautious investor behavior following the geopolitical flare-up in South Asia.

Gold Below ₹97,000: A Rare Dip in a Bullish Year

On Tuesday morning, MCX gold futures for June delivery traded at ₹96,845 per 10 grams, down ₹385 from the previous close. After months of consistent upward movement driven by inflation fears, central bank buying, and global uncertainty, this dip is notable.

In April alone, gold breached the ₹98,500 level and was seen inching closer to the ₹1,00,000 psychological threshold for 10 grams, fueled by safe-haven demand. However, Tuesday’s decline reveals a shift in short-term sentiment — driven less by the India-Pakistan narrative and more by global monetary policy dynamics.

Why Is Gold Falling Despite Escalating India-Pakistan Tensions?

Historically, gold acts as a safe-haven asset during times of geopolitical strife. But in this instance, investors are demonstrating a more nuanced, globally-aligned behavior.

Tensions have spiked between India and Pakistan over the past week, with cross-border shelling reported in Jammu and Kashmir’s Poonch and Rajouri sectors. Although the military standoff has dominated regional headlines, international investors seem more focused on U.S. monetary tightening than localized conflict.

Moreover, domestic investors are opting for a "wait-and-watch" approach, anticipating clarity from the U.S. Federal Reserve's upcoming interest rate decision, which is widely expected to influence gold's global trajectory.

Fed Watch: A Hawkish Pause or Surprise Hike?

The U.S. Federal Reserve’s May policy meeting, scheduled for tomorrow, remains the primary global macro event impacting commodity prices. With inflation remaining sticky in the U.S., markets have priced in the possibility of a prolonged rate hike pause — or even a final small hike before a pivot.

Gold, being a non-yielding asset, becomes less attractive during periods of higher interest rates as bond yields tend to offer better returns. If the Fed maintains a hawkish tone or signals more tightening, gold could face downward pressure in the near term.

“The Fed’s guidance will be crucial. Any mention of a potential hike in June or July can trigger more profit booking in gold futures,” said Meenal Shah, Head of Commodities Research at Ventura Securities.

MCX Gold Futures: Technical View and Price Action

Here's how MCX gold has moved in the past five sessions:

Technically, MCX gold has broken below the immediate support level of ₹97,000. If the current sentiment sustains, the next support lies near ₹96,400, while resistance remains strong at ₹97,800.

Gold in International Markets

Globally, spot gold prices hovered around $2,280 per ounce, down nearly 0.6% as the U.S. dollar index gained and treasury yields edged higher. Comex gold futures also dropped 0.7% to $2,283.

Investors globally remain cautious ahead of the Fed decision, while also digesting mixed economic data from the Eurozone and China.

“Gold’s decline today is less about the India-Pakistan situation and more about dollar strength ahead of the FOMC meeting,” said Jeffrey Halley, Senior Market Analyst at OANDA.

Silver and Other Precious Metals

MCX silver futures also followed suit, declining to ₹1,14,200 per kg, down ₹800 from the previous session. The white metal, which has been more volatile than gold in recent weeks, is reacting both to industrial demand concerns and broader market sentiment.

Platinum and palladium prices remained mixed in international markets.

Domestic Demand & Retail Sentiment

Retail jewellers across India report mixed demand trends. While urban centres like Mumbai and Delhi continue to see festive and wedding-related purchases, rural demand has softened due to high prices and agricultural uncertainty.

Jewellers expect a temporary pause in purchases until gold stabilizes below ₹96,500, at which point value-conscious customers may return.

“Buyers are confused. Many expected gold to hit ₹1 lakh per 10 grams this quarter, but now they’re seeing a dip — so they’re holding back,” said Praveen Mehra, a bullion trader in Zaveri Bazaar.

Central Bank Activity: Still a Tailwind for Gold

Despite short-term corrections, long-term support for gold continues to come from central banks globally. India, China, Turkey, and Russia have been consistent buyers of gold to diversify reserves amid global instability and dollar dependency risks.

RBI’s latest report confirms that India's gold reserves have increased marginally in April, supporting the view that sovereign demand remains intact.

Rupee Movement and Its Impact

The Indian rupee remained stable around 83.31 per dollar, providing a mild cushion to domestic gold prices. However, any sudden rupee depreciation — potentially triggered by geopolitical escalation — could push gold prices higher in INR terms despite global weakness.

Geopolitical Watch: Will India-Pakistan Tensions Escalate?

Defence and geopolitical experts believe that while the current skirmishes are serious, they may not escalate into a full-scale conflict. Both nations are under diplomatic pressure to de-escalate from global powers, including the United States and the United Nations.

Nonetheless, markets remain sensitive to any new developments on this front. A major escalation could quickly reverse the current bearish tone in gold, especially if equity markets react negatively.

Investor Strategies: What Should You Do?

For retail and high-net-worth investors, experts suggest a prudent approach:

• Avoid panic selling during short-term corrections

• Use dips to accumulate gold in staggered lots

• Stay diversified across asset classes

• Watch US Fed commentary closely

Gold is still seen as a long-term hedge against inflation and geopolitical uncertainty. Corrections like these often provide a healthy opportunity to enter.

Outlook: Where Is Gold Headed?

The near-term outlook remains volatile. Key triggers for price action in the next 7–10 days include:

1. US Fed’s policy decision and tone

2. Any unexpected escalation between India and Pakistan

3. Dollar index movement and bond yields

4. Retail demand pick-up ahead of Akshaya Tritiya (May 10)

5. China’s economic data and its impact on global sentiment

Most analysts expect gold to remain range-bound between ₹96,000–₹98,000 until clearer cues emerge. A decisive break above ₹98,500 could renew the rally, while a breach below ₹96,200 might trigger deeper corrections.

The fall of MCX gold below ₹97,000 per 10 grams reflects a temporary shift in investor sentiment driven by global central bank cues rather than local geopolitical tensions. While India-Pakistan conflict remains a concern, the market appears more focused on the Fed's next move.

For investors, this presents both a challenge and an opportunity. The precious metals market is entering a phase of tactical uncertainty, and only those who remain disciplined and informed will benefit in the long run.