Gold Slides as Hot Inflation and India's Import Tax Overwhelm Geopolitical Support

Gold suffered its steepest weekly drop in two months, tumbling nearly 4% as strong US inflation and a surprise Indian import duty hike dampened demand, pulling prices below $4,550.

Gold suffered its steepest weekly loss in two months, tumbling nearly 4% as a double dose of bad news—accelerating US inflation and a surprise Indian tariff hike—sapped demand for the precious metal. The spot price ended Friday at $4,543.60 an ounce, its lowest level in almost two weeks, bringing the weekly decline to 3.75%. Despite the setback, gold still holds a year-to-date gain of roughly 5%.

The primary trigger was a fresh batch of US economic data that dashed any lingering hopes for rate cuts. April's consumer price index rose to 3.8% from March's 3.3%, while the producer price index surged 6.0% year-over-year—the steepest jump in four years. Robust retail sales reinforced the picture of an economy that is running too hot for the Federal Reserve to ease policy. The yield on the 10-year Treasury note shot up to a new 2026 high of 4.591%, and the US dollar index climbed above 99, recording its strongest weekly advance since late February. According to the CME FedWatch Tool, the probability of a rate hike by the end of 2026 now stands at 65%. Fed official Kevin Warsh has signaled that borrowing costs are likely to remain at current levels through year-end.

On the physical demand side, India delivered an unexpected blow. The government hiked import duties on gold from 6% to 15%, a dramatic move that immediately triggered record discounts in local markets. As one of the world's biggest gold consumers, any slowdown in Indian buying tends to ripple globally, and analysts say strong demand from China is unlikely to fully compensate for the loss.

Geopolitical tensions—normally a reliable safe-haven catalyst—failed to stem the selling. Stalled US-Iran negotiations and the effective closure of the Strait of Hormuz, compounded by a failed Trump-Xi summit over the blockade, generated no meaningful haven flows. Market observers noted that monetary policy dynamics are simply overwhelming all other factors at the moment.

From the all-time high of $5,450 set in late January, the yellow metal has now retreated roughly 17%. The 50-day moving average at $4,728 sits well above current levels, while the relative strength index near 50 points to a technically neutral stance. Traders are eyeing the support zone around $4,511, with the round-number threshold of $4,500 also in play.

The ETF segment, which saw net inflows of 45 tonnes in April, has since turned more skittish as investors digest the Fed's hawkish signals. The next major catalyst arrives Wednesday with the release of the Federal Reserve's April meeting minutes, which should offer clearer guidance on the interest-rate path. For now, gold remains trapped between persistent inflation and a dollar that keeps climbing—a combination that leaves little room for a sustained recovery.