Gold Price Set for a Sharp Fall After Hitting Interest Rates; Kerala Could See a Steep Drop

Gold prices may face a sharp fall in Kerala and in global markets as international bullion trades under pressure from rising inflation fears and the impact of a potential Iran–US conflict on energy markets. The international gold price has dropped by $73.96 per ounce and is now at $4,497.52. In Kerala, the price of gold has also moved lower, with the rate per gram falling by ₹55 to ₹14,510. The price of one pavan has declined by ₹440 to ₹1,16,080.

Market watchers say the main reason behind the decline is concern that crude oil prices could rise further if tensions in the Middle East continue, especially around the Strait of Hormuz. Higher oil prices can intensify inflation in India, the United States and other major economies. That inflation risk is increasing pressure on central banks to consider higher interest rates sooner rather than later. In India, inflation is believed to have moved above 5%, after staying below 4% earlier, while the Reserve Bank of India’s comfort zone is 4%. If this level is breached for a sustained period, borrowing costs could rise, creating a stronger headwind for gold.

A possible interest-rate increase in the US and other countries would also strengthen the dollar. A stronger dollar usually makes gold less attractive because investors may shift toward assets that offer better returns, such as bonds and bank deposits. This can reduce demand for gold both as jewelry and as an investment, pushing prices lower. That is one of the main reasons for the current decline in bullion prices.

At the same time, traders note that a typical dip-buying pattern could emerge if prices continue to fall. Dip-buying means investors and buyers step in when prices drop, taking advantage of the lower levels. If such buying becomes strong, gold prices could rebound quickly. There is also a possibility that any successful move toward a peace deal between Iran and the US could ease crude oil prices, weaken the dollar, and give gold a chance to recover.

The Indian rupee has also supported the fall in domestic gold prices. The rupee opened 10 paise stronger against the US dollar and is trading at 95.60. A stronger rupee usually helps reduce import costs for gold, which can soften local prices further.

In Kerala, prices for 18-karat gold and silver continue to vary across market associations. The All Kerala Gold and Silver Merchants Association reduced the price of 18-karat gold by ₹50 per gram to ₹11,985, while silver remains unchanged at ₹285 per gram. The Kerala Gold and Silver Merchants Association set the 18-karat gold rate at ₹11,920 per gram after cutting it by ₹45, and its silver rate stands at ₹280 per gram.

Overall, gold is under clear pressure from inflation worries, possible rate hikes, dollar strength and geopolitical uncertainty, even as short-term bargain buying may limit the fall.