Gold Prices Plummet Amid Rising Mideast Tensions and Interest Rate Hikes

The price of gold on the Multi Commodity Exchange fell by Rs 1,331 to Rs 1,52,171 per 10 grams on Monday. This drop is attributed to fresh tensions between Iran and the US, developments in the Middle East, and the potential impact on inflation and interest rates.

Oil prices also declined as investors assessed a recovery in Saudi Arabian shipments despite continued attacks by Yemen's Houthis. Meanwhile, several major central banks have raised interest rates, indicating that further increases may be needed to combat inflation fueled by the Iran war.

Gold is traditionally seen as a hedge against inflation, but higher interest rates can decrease demand for it as investors opt for interest-bearing investments instead. Spot gold prices were nearly flat at $4,379.74 per ounce after reaching a one-week high on Friday.