Gold falls Rs 1,800, silver crashes over Rs 6,400: What's dragging precious metals lower?

Gold and silver extended losses on Monday as stronger US jobs data altered rate expectations. The slide deepened as higher Treasury yields, Middle East tensions and inflation worries weighed on bullion.

In Short

• Strong US jobs data raised rate hike chances to 72% by December
• Silver dropped 2.60%, hit by weak investment and industrial demand
• Middle East tensions pushed oil prices up, adding inflation fears

Gold and silver prices extended their decline on Monday, with both precious metals coming under heavy selling pressure as investors reassessed the outlook for US interest rates after stronger-than-expected economic data from the world's largest economy.

On the Multi Commodity Exchange (MCX), gold was trading at Rs 1,53,568 per 10 grams, down Rs 1,826 or 1.17%. Silver fell even more sharply, dropping Rs 6,466 or 2.60% to Rs 2,42,071 per kg.

The fall follows a difficult week for global bullion markets. Comex gold tumbled more than 4% last week, while silver recorded its steepest weekly decline since March 2026.

STRONG US JOBS DATA CHANGES THE MOOD

The biggest reason behind the fall in gold and silver is the latest US jobs report.

The US economy added more jobs than expected in May, marking the third consecutive month of strong employment growth. The data suggested that the labour market remains healthy despite concerns about slowing economic growth.

For investors, that has an important implication: the US Federal Reserve may not need to cut interest rates anytime soon.

In fact, markets are now increasingly pricing in the possibility of a rate hike before the end of the year. According to CME FedWatch data, there is a 72% probability of a rate increase by December.

Higher interest rates are usually bad news for gold and silver because these metals do not generate any interest income. When bond yields rise, investors often shift money away from bullion and towards interest-bearing assets.

FED RATE HIKE FEARS HIT GOLD

Analysts say the precious metals market is now focused on the possibility of a more hawkish Federal Reserve.

"Gold prices extended losses on rising fears of a US rate hike after a strong jobs report," Reuters reported, citing market analysts.

Kelvin Wong, Senior Market Analyst at OANDA, told Reuters that markets have started pricing in a more hawkish Federal Reserve outlook, while rising US Treasury yields are adding further pressure on gold.

The yield on the benchmark 10-year US Treasury note climbed to a two-week high, increasing the opportunity cost of holding non-yielding assets such as gold.

IRAN-US TALKS AND MIDDLE EAST UNCERTAINTY

Another factor affecting bullion prices is the uncertainty surrounding Iran-US negotiations.

According to Axis Securities, gold came under pressure last week as investors grew disappointed by the lack of a clear breakthrough in ongoing talks between Iran and the United States.

After weeks of negotiations, markets were hoping for signs of progress. Instead, the absence of a concrete agreement has created uncertainty about the future direction of global inflation, energy prices and monetary policy.

Axis Securities said Comex gold fell more than 4% last week as investor sentiment weakened amid uncertainty over Iran-US talks, strong US jobs data and persistent inflation concerns.

RISING OIL PRICES ARE ADDING TO INFLATION WORRIES

Fresh tensions in the Middle East have also pushed crude oil prices higher.

Israel said it struck military targets in western and central Iran on Monday, despite reports that US President Donald Trump had urged Israeli Prime Minister Benjamin Netanyahu to avoid further attacks.

The developments pushed oil prices up by more than $3 per barrel, raising fears that inflation could remain elevated.

While gold is often considered a hedge against inflation, rising inflation can sometimes hurt bullion if it leads central banks to keep interest rates higher for longer.

That is exactly what investors are worried about now.

WHY IS SILVER FALLING MORE THAN GOLD?

Silver has seen a sharper decline than gold because it is both a precious metal and an industrial commodity.

Apart from being used for investment, silver is widely used in electronics, solar panels, electric vehicles and manufacturing.

When investors become concerned about economic growth or expect higher interest rates, silver often faces double pressure from weaker investment demand and concerns about industrial consumption.

Axis Securities noted that Comex silver recorded its biggest weekly fall since March 2026 as heavy selling spread across both bullion and industrial metals.

WHAT ANALYSTS EXPECT NEXT

Axis Securities expects both gold and silver to remain under pressure in the near term.

The brokerage said gold is likely to trade with a negative bias this week as markets continue to focus on US interest rate expectations and inflation concerns.

For silver, the outlook also remains weak. Analysts expect the metal to stay under pressure as long as it remains below the key resistance level of $73 per ounce.

For now, investors will closely watch developments in the Middle East, US inflation data and comments from Federal Reserve officials for clues on where gold and silver prices may head next.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)

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