The War Premium Just Expired — and Gold’s Not the Shelter It Used to Be

Mumbai | June 17  – Gold prices in India dropped below ₹1 lakh per 10 grams this week — a quiet shift, but one that signals a change in market sentiment. The safe-haven metal, which rallied sharply through the first half of 2025, is now pulling back as tensions in West Asia ease and focus shifts back to the U.S. Federal Reserve’s policy stance.

For months, gold had been moving higher on the back of global uncertainty. Rising geopolitical risks, especially from the Iran-Israel conflict, pushed investors toward safer assets like gold. Add to that the expectations of U.S. interest rate cuts — and prices surged. But now, that narrative is losing strength.

Reports of possible ceasefire talks between Iran and Israel have helped reduce global market anxiety. Stock markets are rising, oil prices are more stable, and investor interest is rotating back to riskier assets. Gold, which benefits most when fear dominates, is starting to feel the pressure.

And then there’s the Fed. With a policy decision expected this week, markets are cautious. While rate cuts may still happen in 2025, any signal that they could be delayed might weigh on gold. That’s because gold doesn’t offer any interest — and when rates stay high, the opportunity cost of holding it increases.

Domestic Prices Cool Down

The shift is already visible in local markets. Gold prices across major Indian cities have dropped. Futures on the Multi Commodity Exchange (MCX) are also down.

Here’s a quick look at where prices stand as of June 17:

Internationally, gold futures are also trading lower, reflecting reduced demand for safe assets. Silver, however, is showing more strength. Unlike gold, silver has strong industrial demand — especially in electronics, solar, and electric vehicles — which is helping support its prices.

From Panic to Pause

The current correction in gold is not a crash. It’s a return to normal. Over the past few months, prices had risen sharply — not because of rising demand, but because of fear and speculation. Now that global risks are easing, the rally is losing steam.

In India, consumer buying has slowed. High prices have kept many retail buyers on the sidelines. With no major festivals around the corner, the usual seasonal boost in demand is also missing. At these levels, gold is more of a wait-and-watch asset.

Investors are now reassessing. Without a fresh global shock or a major central bank shift, there may not be enough reason for gold to push significantly higher. The metal is still part of a balanced portfolio — but it may no longer be the lead story.

Bottomline: Gold Needs Uncertainty — and There’s Less of It Right Now

Gold shines brightest during uncertainty. That’s when it protects, preserves, and outperforms. But as markets settle and global risks ease, its appeal softens. This week’s dip in prices is a reminder that gold’s rally was built on temporary factors — and those factors are now fading. Unless the global picture changes again, gold may spend the coming months in a range, rather than a rally.

The metal still matters. But it may not lead the market anymore — at least, not until the next storm.