Gold Prices Slip Below ₹1,62,850 per 10 Grams to Hit 6-Week Low

Synopsis: Gold prices fell to a six-week low on May 18, 2026, slipping below $4,500 per ounce as surging crude oil prices, stronger US inflation signals, and a firm dollar reinforced expectations that global interest rates could stay higher for longer. Meanwhile, India’s sharp increase in bullion import duties and tighter silver import rules are adding fresh pressure on domestic demand.

Gold began the week on a weaker note, with spot prices briefly sliding 1.1% to $4,488.99 per ounce in early Asian trade on Monday, marking the metal’s lowest level since March 30, 2026. US gold futures for June delivery also dropped about 1.5% to around $4,493 per ounce during the early session.

However, as trading progressed through European hours, bullion recovered part of its losses, with spot gold edging back toward $4,535 per ounce. Despite this rebound, analysts say the metal faces strong overhead resistance as macroeconomic headwinds continue to dominate the market.

At the core of the sell-off is a renewed surge in energy prices that is reshaping expectations around global monetary policy. Crude oil climbed nearly 8 – 10% last week and remained above $100 per barrel, driven by escalating geopolitical tensions in the Middle East and growing concerns over supply routes through the Strait of Hormuz, one of the world’s most critical energy chokepoints.

A drone strike that caused a fire at a nuclear power facility in the United Arab Emirates triggered another spike in energy markets on Monday, while Saudi Arabia reported intercepting multiple drones, highlighting the deteriorating regional security environment.

Higher energy prices risk pushing global inflation higher again, which in turn strengthens expectations that the Federal Reserve may keep interest rates elevated for longer. That environment typically weighs on non-yielding assets such as gold.

Alongside global macro forces, a major policy shift in India has introduced a new layer of pressure on bullion demand. On May 13, the Indian government raised the baseline import duty structure on gold and silver to 15%. When the standard 3% Integrated GST (IGST) is calculated over the landed value of the metal, the total tax incidence on imported physical bullion effectively rises to about 18.45%. 

Just days later, the government tightened silver import rules. The Directorate General of Foreign Trade moved silver from the “Free” category to “Restricted”, meaning importers must now obtain a government licence before bringing shipments into the country. The order carved out exemptions only for 100% Export Oriented Units (EOUs) and Special Economic Zone (SEZ) units whose imports do not enter the domestic market.

The licensing requirement was also aimed at closing a major tariff arbitrage loophole created under the India UAE Comprehensive Economic Partnership Agreement. After the duty hike, traders began routing silver imports through Dubai, where the concessional duty under the agreement is around 7%, significantly lower than India’s new 15% duty structure.

By shifting silver to the restricted category, authorities effectively blocked this route and tightened control over bullion inflows. Prime Minister Narendra Modi has also urged citizens to reduce non-essential gold purchases over the coming year as the government attempts to manage foreign-exchange outflows. 

India is the world’s second-largest gold consumer, and large bullion imports have historically widened the country’s current account deficit during periods of high global commodity prices. With crude oil trading above $100 per barrel and India’s energy import bill rising, policymakers appear increasingly focused on conserving foreign exchange reserves.

In the near term, traders are closely monitoring the upcoming FOMC meeting minutes for clues about the Federal Reserve’s policy outlook. Fresh US macro data including retail sales and flash PMI readings will also provide insights into the strength of economic activity and inflation momentum.

Meanwhile, a high-profile meeting between former US President Donald Trump and Chinese President Xi Jinping in Beijing is expected to cover issues ranging from global trade tensions to supply-chain stability and the evolving Middle East conflict. Manav Modi of Motilal Oswal Financial Services highlighted US retail sales data as a key near-term catalyst that could influence bullion sentiment.

For now, with the dollar firm, oil elevated, Indian import duties biting, and monetary policy risks lingering, analysts believe the path of least resistance for gold may remain sideways to lower unless geopolitical tensions escalate sharply enough to revive safe-haven demand.

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