MCX gold and silver hit six-month low in June amid firmer US yields, strong dollar: Here’s what experts think

Precious metals gold and silver prices declined to around a six-month low in June 2026, amid a strong dollar, firmer US yields, expectations of the US Fed increasing interest rates during the year, and uncertain geopolitical conditions.

Gold futures for expiry in August declined as much as 0.46% or ₹665 to hit an intraday low of ₹1,43,765 per 10 grams on the Multi-Commodity Exchange (MCX) on Thursday, July 2, compared to the closing price of ₹1,44,430 per 10 grams in the previous session, according to exchange data.

However, silver was trading in the green on Thursday. On the MCX, silver contracts with expiry in September fell as much as 0.35% or ₹809 to the session’s low of ₹2,29,575 per kilogram on July 2, as against the previous closing price of ₹2,30,384 per kilogram. It also rose by 0.85% or ₹1,955 to hit an intraday high of ₹2,32,339 per kilogram.

In June 2026, gold hit its lowest level since December 22, 2025, and silver hit its lowest since December 23, 2025, reflecting roughly a six-month low, according to the active trading sessions on the Indian commodity market, exchange data showed.

What's impacting gold and silver prices?

Market experts suggest that gold and silver have corrected because the market has shifted from a fear trade to a rate trade.

“A stronger dollar, firmer US yields and fading expectations of aggressive Fed easing have reduced the appeal of non-yielding assets,” said Harshal Dasani, Business Head at INVAsset PMS.

Silver has fallen harder because its previous run-up carried more speculative positioning and it also has an industrial demand linkage. Once momentum cracked, leveraged longs unwound quickly, Dasani added.

Outlook for gold and silver in the current geopolitical dynamic

Precious metals such as gold and silver witnessed a massive selloff at the end of January 2026, following the appointment update of US Federal Reserve Governor Kevin Warsh.

Since the correction, gold and silver prices have been volatile and somewhat linked to geopolitical developments in West Asia.

Experts suggest that the geopolitical setup is mixed, and any easing in West Asia reduces the panic premium in bullion, especially if crude stabilises and inflation expectations cool.

Dasani stated, however, this is not a structural bearish setup for precious metals.

The risk of renewed stress around energy routes, sanctions, currency volatility or central-bank diversification can potentially rebuild safe-haven demand.

Interest rate play

The market expects the US Federal Reserve to go for at least one rate hike this year, especially considering the rise in inflation in the United States, according to Ajay Bodke, an independent capital markets analyst.

Thus, as per street expectations, the rates are projected to increase by 25 basis points (bps). This usually leads to a hardening in bond yields, Bodke said, adding that while silver has some industrial use, gold is purely a store of value.

Bodke further explained that whenever investors anticipate an interest rate hike in a rising inflation environment, they tend to shift their funds from non-return-yielding assets like gold into higher-yielding assets.

"In a rising inflationary environment, physical assets perform well, whereas financial assets do better when inflation is declining," said Ajay Bodke.

When interest rates are rising, bond prices come off due to their inverse relation with the yields, leading to more people buying newer bonds at lower costs, Bodke added.

To protect against rising inflation, investors either sit on cash or try to buy real estate or precious metals.

"Gold prices have surged in the last five to seven years because the US weaponised the dollar. However, the rise has been too sharp in too short a period. This has led to a correction in gold prices," said the independent analyst.

The expert opined that investors should wait it out even though the prices have corrected from the peak of around $5,500 per ounce to about $4,000 now.

“So the point is, whenever the rise is parabolic, I think the aftermath of that gets built into the system for those excesses to get corrected,” Bodke said.

How is gold placed amid India's inflation outlook?

For Indian portfolios, gold still has a role, but not as a momentum trade, Dasani stated, adding that while domestic inflation is not alarming, crude, rupee and imported inflation remain key variables.

“Gold works best as insurance against policy mistakes, currency weakness and geopolitical shocks. The allocation case becomes stronger on corrections, not after vertical rallies. The right lens is portfolio protection, not short-term price chasing,” he said.

What's next for gold-linked stocks?

While gold-linked stocks benefit from higher commodity prices, the companies face heightened revenue uncertainty due to a dynamic pricing equation driven by market volatility.

Gold-linked stocks need a separate lens from physical gold or ETFs, said Dasani, adding that while lower bullion prices can support jewellery demand by improving affordability, a sharp fall can also create inventory losses and pressure margins.

Gold-financing businesses may see steady demand, but collateral values and asset quality need monitoring.

The cleaner opportunity lies in companies with disciplined working capital, strong balance sheets and earnings drivers beyond just rising gold prices. Gold equities are operating businesses with gold sensitivity, not a direct replacement for gold, Dasani added.

Though rising gold prices do impact volumes, they aren’t that negative for companies, Bodke stated.

Bodke opined that the pace or the momentum of the price change is more important, and if the rise or fall in bullion prices is too sharp and happens in too short a time period, it is not good for any industry.

“A sharp and abrupt increase or a sharp and abrupt decrease are something that is not good from any business's perspective. You simply can't plan,” he said, adding that businesses need to have a stable price environment when planning for their inventory for the next year or two.

Note: All data related to the closing price, intraday returns, and YTD returns have been collected from the NSE website. (Data as of July 2)