MCX spot gold rate at Rs 97,153 per ten gram after India strikes Pakistan
Gold futures opened 0.9 percent down at Rs 96,625 per 10 grams on the Multi-commodity Exchange (MCX) in the morning trade on May 7, hours after India struck terror targets in Pakistan and Pakistan-Occupied Kashmir.
MCX June gold futures recovered a bit, but were still trading 0.28 percent lower at Rs 97,220 at around 4 pm (IST) on May 7. Spot prices on the exchange, on the other hand, rose to a two-week high of Rs 97,153, a level last seen on April 22, 2025.
The yellow metal is likely to be in focus in the backdrop of rising tensions between the two neighbours and worries of an escalating armed conflict. Gold rates have retreated this month after hitting a record high of Rs 1 lakh.
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"Historically, during 1965, 1971 and Kargil wars, we saw that gold prices didn't move much. Gold is more driven by developments in the Middle East and the US and China -related activities. This event (Operation Sindoor) is largely neutral for gold," said Tarun Satsangi, Associate Director-Research at Univest.
It’s the global factors that will continue to have a bigger impact on gold prices. "Slowing world economy and trade war between China and the US are driving the gold prices globally,” he added. International gold rate, too, had touched a two-week high of $3,431.77 on May 6, ahead of the US Fed meet on May 7.
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The military strikes were carried almost two weeks after the Pahalgam terror attack in which 26 tourists were killed on April 22.
India said its forces carried out missile strikes on nine terror targets, including the Jaish-e-Mohammad headquarter of Bahawalpur and Lashkar-e-Taiba's base in Muridke.
Meanwhile, spot gold price (Fine Gold 999) as per India Bullion and Jewellers Association (IBJA) was hovering around 97,493 on May 7 (12 am). IBJA gold price is used as a reference rate for pricing domestic gold exchange-traded funds (ETFs) and gold funds.
The relentless India-Pakistan tensions have generated the uncertainty in the international market, which normally propel investors towards safety assets such as gold.
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Previously, conflicts have shown an uptrend in gold in war situations. For instance, the Russia-Ukraine conflict in 2023 saw an 8 percent rise in gold prices."Historically, geopolitical tensions within the region have driven gold prices up as investors look for refuge, but barring a significant rise in tensions, the short-term effect on Indian gold prices may be minimal. The market will likely watch for further developments and how they align with global monetary policies before making a lasting move," said Trivesh, Chief Operating Officer, Tradejini.