Gold's Double Blow: India's Surprise Tariff Hike and Soaring US Yields Crush Momentum

India triples gold import duty to 15% while US bond yields hit multi-year highs, pushing gold to a 3.75% weekly loss. Rising dollar and rate hike expectations outweigh safe-haven demand.

Gold is being squeezed from two directions at once, and the combination is proving too heavy for safe-haven buyers to offset. India's decision to nearly triple its import duty on the metal has landed alongside a relentless climb in US bond yields, leaving the precious metal nursing its worst weekly loss in months.

The yellow metal settled Friday at $4,543.60 an ounce, shedding 2.88% on the day and 3.75% over the week. The monthly decline now stands at 5.61%, though the year-to-date tally still shows a respectable 4.65% gain. The rally is not broken, but it has lost significant steam.

India, one of the world's largest consumers of physical gold, jolted markets on May 13 by raising import tariffs on gold and silver to 15% from the previous 6%. That represents a dramatic cost shock for jewellers, dealers, and hoarders. With domestic buyers now facing a sharply higher premium, demand for physical imports is expected to cool — a headwind that has already triggered selling in the futures market.

At the same time, US Treasury yields are drawing capital away from non-yielding assets. The 30-year bond yield breached the 5% mark, hitting multi-year highs, while the 10-year note climbed to around 4.6%. For gold, which generates no income, rising real yields raise the opportunity cost of holding it. The dollar's strength — the DXY index rose to 99.3 points, nearing the psychologically important 100 level — adds further pain by making gold more expensive for buyers outside the dollar bloc. Markets now see a 65% probability that the Federal Reserve, under newly confirmed Chair Kevin Warsh, will deliver another rate hike by year-end after April inflation came in at a hotter-than-expected 3.8%.

Geopolitical tensions in the Middle East would normally provide a floor under gold. President Donald Trump recently rejected an Iranian peace proposal and warned of expanding military operations, while Brent crude surged more than 7% in a week to near $110 a barrel. Yet the safe-haven bid has been overwhelmed by rate expectations, as higher energy prices feed inflation fears and reduce the Fed's room to ease. Eurozone consumer confidence slumped to minus 16.3 from a revised minus 12.3, but even that malaise could not rekindle gold demand.

Technically, gold has slipped below its 50-day moving average of $4,728.13 — a gap of roughly 3.9% — and the relative strength index sits at a neutral 49.8, indicating the market is bruised but not yet oversold. The next support zone lies around $4,488, followed by the $4,400 area. A breach below $4,400 opens the door to $4,100, the level that would keep the longer-term target of $6,000 in play. Below that, $4,000 is the final line of defense.

Institutional investors have not staged a full retreat. Gold ETFs attracted inflows of approximately 45 tonnes in April, pushing global holdings to 4,137 tonnes — a factor that helps stabilise the metal but cannot generate fresh upside momentum on its own. Coming up, China releases April retail sales and industrial production data on Monday, followed by US purchasing managers' indices on Thursday, with a G7 finance ministers' meeting in France providing potential cross-asset catalysts in between. For now, the narrative is dominated by yields and the dollar, and until those headwinds ease, gold's short-term path looks precarious.