Gold prices experienced a significant decline on Wednesday, both in India and internationally, according to FXStreet data. In India, the price of gold dropped to 12,869.86 Indian Rupees (INR) per gram from 13,103.82 INR the previous day, and to 150,109.60 INR per tola from 152,840.30 INR, reflecting a notable decrease in local gold prices [1]. Internationally, Gold (XAU/USD) extended its breakdown below the 200-day Simple Moving Average (SMA), falling to a fresh low since March 23, below the $4,200 mark during the Asian session [2]. This decline is attributed to renewed hostilities between the US and Iran, which have fueled inflation fears and bolstered expectations for more hawkish central bank policies [2].
The US launched self-defence strikes against Iran on Tuesday in retaliation for the downing of a US Apache helicopter in the Strait of Hormuz. Iran’s Islamic Revolutionary Guard Corps (IRGC) responded by targeting an airbase in Jordan hosting US forces, as well as Kuwait and Bahrain, and warned of a "more severe response" if US aggression continues. Iran's Foreign Minister Abbas Araghchi stated that the country's armed forces would not leave any attack or threat unanswered and warned the US to leave the region or face consequences. These developments have kept geopolitical risk premiums elevated and supported crude oil prices above a two-month low, further intensifying inflation concerns [2].
According to the CME Group's FedWatch Tool, traders are assigning nearly a 75% chance that the US Federal Reserve will hike interest rates by the end of this year, driven by worries about persistent inflation due to elevated energy prices. However, US Dollar bulls are cautious and await the release of the latest US Consumer Price Index (CPI) report, which is expected to influence market expectations regarding the Fed's policy path and provide meaningful impetus to the USD. In the meantime, the fundamental backdrop continues to exert downward pressure on gold prices [2].
From a technical perspective, gold's latest leg down confirms a breakdown below a downward-sloping channel from the April swing high, with the precious metal entrenched below the 200-day SMA, validating a near-term negative outlook. The daily Relative Strength Index (14) near 28 signals oversold conditions, and the MACD indicator deep in negative territory reinforces prevailing bearish momentum. This leaves gold vulnerable to further declines, potentially retesting the March swing low around the $4,100 mark. Initial resistance is seen at the former channel floor around $4,238, followed by the 200-day SMA near $4,444. A recovery above these levels would begin to ease the broader downside pressure [2].
CONCLUSION
Gold prices have fallen sharply in both India and global markets, driven by escalating US-Iran tensions and expectations of more hawkish central bank policies amid inflation concerns. Technical indicators suggest further downside risk, with traders closely watching upcoming US CPI data for clues on the Federal Reserve's next move. The market sentiment remains bearish, and gold is likely to stay under pressure unless geopolitical risks subside or monetary policy expectations shift.