Gold Falls After Precision Strikes on Pakistan! What’s Next as Fed Rate Call Looms

Gold Falls After Precision Strikes on Pakistan! What’s Next as Fed Rate Call Looms

Gold Prices Drop Below ₹97,000 on MCX as India-Pakistan Tensions Rise and US Fed Decision Nears

Gold prices in India opened lower on Wednesday, reacting to rising geopolitical tensions between India and Pakistan, along with anticipation around the US Federal Reserve’s latest monetary policy decision. After a sharp rally in the previous session, both gold and silver retreated sharply.

 MCX Gold Opens Lower After Strong Rally

On the Multi Commodity Exchange (MCX), gold prices opened at ₹96,900 per 10 grams, down from Tuesday’s close of ₹97,491. By 9:05 AM, gold had slipped further to ₹96,650, a drop of ₹841 or 0.86%.

This decline comes right after a more than 3% rally in the previous trading session, driven by safe-haven demand due to escalating regional tensions.

 What Sparked the Gold Sell-Off? Operation Sindoor and US Market Optimism

The immediate trigger for market volatility was ‘Operation Sindoor’, a precision strike conducted by the Indian Armed Forces targeting terror bases in Pakistan and Pakistan-occupied Kashmir (PoK).

As many as nine terror sites were hit in what officials called a “high-impact preemptive strike.” While these strikes initially boosted safe-haven demand for gold, global cues soon turned bearish.

 Global Gold Prices Retreat Despite Tensions

In the international markets, gold prices actually moved lower, as investors shifted focus to the upcoming US-China trade talks. Optimism around these potential negotiations weakened demand for safe-haven assets like gold.

• Spot gold was down 1.2% at $3,388.67 per ounce

• US gold futures fell 0.7% to $3,397.70 per ounce

Jigar Trivedi, Senior Research Analyst at Reliance Securities, said:

“We expect gold prices to remain under pressure during the day, especially after signs emerged that the US and China might restart trade talks in Switzerland. However, President Trump’s mixed signals on trade deals continue to confuse markets.”

 Silver Prices Also Dip on MCX

Silver followed gold’s lead and opened lower on Wednesday. The MCX silver price dropped by ₹251, or 0.26%, to trade at ₹96,450 per kg in early morning trade.

 All Eyes on the US Fed Policy Decision

Another key factor driving gold prices is the US Federal Reserve’s monetary policy announcement, expected later today.

Investors are keen to hear Fed Chair Jerome Powell’s comments on inflation, interest rate cuts, and the overall health of the US economy.

Most analysts expect the Fed to hold interest rates steady, but any hint at future rate cuts or inflation worries could swing gold prices sharply in either direction.

 What Experts Are Saying: Gold and Silver Outlook

Jigar Trivedi (Reliance Securities):

“We see a bearish trend today. International gold prices have already dropped. MCX Gold July futures may test ₹96,500 during the session.”

Rahul Kalantri (Mehta Equities VP – Commodities):

Gold Price Levels:

• Support: ₹96,650 – ₹95,980

• Resistance: ₹97,950 – ₹98,390

Silver Price Levels:

• Support: ₹95,580 – ₹94,750

• Resistance: ₹97,350 – ₹97,950

Global Gold Support/Resistance:

• Support: $3,335 – $3,310

• Resistance: $3,400 – $3,422

Global Silver Support/Resistance:

• Support: $32.65 – $32.40

• Resistance: $33.30 – $33.55

 What’s Next for Gold Investors?

Here’s a quick breakdown of what could move gold prices in the coming days:

1. Geopolitical Risk:

• If tensions between India and Pakistan escalate, gold could see renewed buying as a safe-haven asset.

• Watch for any response from Pakistan or further military operations by India.

2. US Fed Guidance:

• A dovish Fed (hinting at rate cuts) would generally be positive for gold, which performs better in a low-interest-rate environment.

• A hawkish tone (rate hikes or delays in cuts) could pressure gold further.

3. Global Trade Sentiment:

• Positive developments in US-China trade talks could weaken gold, as investors shift to riskier assets like stocks.

• However, uncertainty or breakdown in talks may support gold prices again.

 Should You Buy Gold Now?

If you’re a long-term investor, the current dip may offer a good buying opportunity, especially if geopolitical tensions rise or the Fed signals future rate cuts.

However, short-term traders should tread carefully. With multiple events unfolding globally, volatility is expected to remain high over the next few days.