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Precious metals reversed on Monday morning, with gold and silver prices retreating from recent highs. Despite intensifying geopolitical conflict in the Middle East, a "toxic mix" of a surging US Dollar and skyrocketing oil prices has forced bullion investors to lock in profits.

As of 11:57 AM IST, Gold June futures on the MCX were trading at ₹1,52,985 per 10 grams, down nearly 1.1% or ₹1,624 from the previous close. Silver followed, with MCX Silver May futures trading near ₹2,50,001 per kg. It's struggling to maintain its psychological support levels.

Why the Safe-Haven Rally Stalled

The seizure of an Iranian vessel by US forces would trigger a massive flight to safety. However, the move has been neutralized by two factors:

• Dollar Strength: The US Dollar Index has climbed to 98.47, making gold more expensive for holders of other currencies.
• The Oil-Inflation Trap: With Brent crude surging over 5% to $95.53, inflation expectations are spiking. This reduces the likelihood of immediate interest rate cuts by the Federal Reserve, increasing the opportunity cost of holding non-yielding assets like gold.

The price drop also comes as physical demand in India remains muted. Following a weekend of subdued festival buying, jewelers report that record-high prices have effectively priced out the retail consumer. 

Technical Levels to Watch

Technically, gold is finding interim support near the ₹1,52,500 mark. A breach below this could trigger further selling toward the ₹1,51,800 zone. For silver, the ₹2,48,000 level remains a critical floor. Traders are now closely monitoring the US negotiators' trip to Islamabad; any sign of a diplomatic breakthrough could further ease the geopolitical risk premium, while a failure in talks could reignite a sudden safe-haven bid.