Israel-Iran conflict: Gold prices may hit $4,000 per ounce in India

Demand for the yellow metal is ebbing as prices continue to soar

Gold prices in India’s futures market crossed the ₹1 lakh per 10 grams for the first time, with MCX futures settling at ₹1,00,276 last week as Israel-Iran tensions escalated to bombardments. In international markets, spot gold end­ed at $3,432 per ounce —another significant level in a year already shaped by economic and geopolitical headwinds.

 

In Mumbai’s Zaveri Bazar, pure gold closed at ₹99,058 per 10 grams on Friday. At these elevated levels, demand appears to be ebbing. “At this price, demand has dried up,” said Chirag Sheth, principal consultant at Metal Focus, the London-headquartered precious metals consultancy. Prices are currently quoted at a discount of $40 per ounce (₹1,120 per 10 grams) to the landed cost of imports. 

June and July typically mark a seasonal lull for gold purchases. Buying generally picks up in the latter half of August with the onset of the festival season. 

Still some experts are bullish on yellow metal. “There is a high probability of gold heading towards $4,000 per ounce,” Nigam Arora, a US-based algorithmic analyst and author of The Arora Report, told Business Standard. “Buying from central banks, including in India, China, Turkey, and Poland has been incessant.” 

The latest surge in gold prices has followed the sudden escalation of conflict between Israel and Iran. “In the short term, gold is overbought,” Arora said. “The direction of gold will depend on the news from the Israel-Iran war. Should Israel achieve a decisive outcome, gold could pull back. The Arora Report’s call is that any major pullback in gold should be viewed as a buying opportunity.” 

In its most recent outlook, Metal Focus projected that the average price of gold in 2025 would be 35 per cent higher, reaching $3,210 per ounce. While that figure represents a mean, the consultancy notes the potential for sharper gains, supported by a raft of economic factors: Policy uncertainty in the US, including tariffs, high and unsustainable sovereign debt, and volatile equity markets. 

Sheth echoed this view. “The gold price is expected to reach $3,800 to $4,000 per ounce next year, 2026,” he said. “The Israel-Iran war has only added fuel to the fire.” Crude oil prices have also risen in recent days, adding to inflationary pressure. 

Still, he noted that a period of geopolitical stability could prompt profit-taking. Stress­ing the possibility of the market giving a knee jerk reaction and gold prices witnessing a sudden drop, Sheth said any correction is likely to be short-lived and followed by renewed buying, pushing prices higher once again. 

Activity on the MCX has reflected the heightened inve­s­tor interest in gold amid conflict between Israel and Iran. Open interest in gold futures rose from 13,012 lots on Wedn­esday to 17,264 lots by Friday — a jump of nearly 32 per cent. According to MCX data, the top 10 long open interest positions totalled 9,259 lots, while bearish bets stood at 5,779 lots.