Amid an escalation in the US-Iran war, crude oil prices skyrocketed on Monday, putting pressure on global equities, including the Indian stock market. Key benchmark indices, the BSE Sensex and Nifty 50, crashed by over 2%, while the Bank Nifty Index nosedived byover 3%.
In line with the sharp selling in the stock market, gold and silver rates also received a heavy beating, as the precious metals shed over 10% during the morning trading session today.
COMEX gold rate today opened on a gap-down note and touched an intraday low of $4,128 per troy ounce, logging an intraday loss of more than 10%. Likewise, the MCX gold rate today opened lower at ₹1,40,158 per 10 gm and slumped to ₹1,29,595 per gm, recording a 10% decline. Similarly, the COMEX silver rate and the MCX silver price today also plunged over 10% during the early morning session on Monday.
However, gold and silver prices on MCX and in the international market recovered from the intraday low after the US President Donald Trump’s claims of ‘complete and total resolution’ to the hostility in the Middle East. The Gift Nifty also surged over 4%, signalling a big gap-up opening on Tuesday, provided things remain the same in the next 24 hours. Despite the recovery, gold and silver prices remained 3-4% lower.
According to market experts, the primary reason for all three assets: equities, gold and silver price crash is escalation in the US-Iran war after the US President Donald Trump’s 48-hour ultimatum to reopen the Strait of Hormuz. This has driven crude oil prices higher, reigniting inflation fears. The inflation fear has dented the hopes of a US Fed rate cut in the near term.
Market experts expect inflation fears to weigh on companies’ quarterly earnings in the short to medium term, a core reason behind the stock market fall.
Meanwhile, gold and silver rates have fallen due to the petrodollar regime. Soaring crude oil prices and renewed fears of inflation have dimmed hopes of a US Fed rate cut in the near term. This has strengthened the US dollar, and, as a result, gold and silver prices have come under sharp selling pressure.
Why has the Indian stock market crashed?
On the reasons that led to the Indian stock market crash on Monday, Ponmudi R, CEO of Enrich Money, said, “The key overhang remains the US–Israel–Iran conflict, which is now directly impacting global energy flows. Heightened concerns around the Strait of Hormuz have pushed Brent crude above $110 per barrel, increasing inflationary risks and external vulnerabilities for India.”
The Enrich Money expert said that the Indian rupee continues to weaken, approaching the 94 mark against the US dollar, reflecting sustained external pressures. This depreciation is more than just a currency move—it is a macro signal that adds to inflation concerns and overall economic strain.
On how inflation risk would impact the Indian stock market, Anuj Gupta, a SEBI-registered market expert, said, “Escalation in the US-Iran war and soaring oil prices have renewed the inflation fear, which means weak earnings seasons in the upcoming quarters due to squeezing margins after a rise in the input cost due to inflation.”
Why are gold and silver rates falling today?
On the reasons dragging gold and silver rates today, Gupta said, “The renewed inflation fear has hit the hopes of a US Fed rate cut in the near term. This has fueled demand for the US dollar over the last three weeks following the outbreak of the US-Iran war. Due to the hawkish stance of the US Fed and other central banks worldwide, US Treasury yields and the US currency may outperform other assets. That’s why gold and silver prices are falling despite escalation in the US-Iran.”
Both experts maintained that all three assets are moving in the same direction, driven by the US-Iran war and crude oil prices.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.