Why are the Indian stock market, gold and silver prices moving in the same direction? Explained

Amid an escalation in the US-Iran war, crude oil prices skyrocketed on Monday, putting pressure on global equities, including the Indian stock market. Among the key benchmark indices, the BSE Sensex and Nifty 50 indices crashed by over 2%, while the Bank Nifty Index nosedived byover 3%. However, following sharp selling in the stock market, gold and silver rates today received a heavy beating, as the precious metals shed over 10% during the morning trading on Monday.

The COMEX gold rate today opened with a downside gap and touched an intraday low of $4,128 per troy ounce, logging an intraday loss of more than 10%. Likewise, the MCX gold rate today opened with a downside gap at ₹1,40,158 per 10 gm and touched an intraday low of ₹1,29,595 per gm within a few minutes of the Opening Bell on the Multi Commodity Exchange, aka MCX. After slipping below the ₹1.30 lakh per 10 gm mark, the precious yellow metal crashed by over 10% in India on Monday. Similarly, the COMEX silver rate and the MCX silver price today opened with a downside gap and shed over 10% during the early morning session on Monday.

According to market experts, the primary reason for all three assets: equities, gold and silver price crash is escalation in the US-Iran war after the US President Donald Trump’s 48-hour ultimatum to reopen the Strait of Hormuz. This has driven crude oil prices higher, reigniting inflation fears. The inflation fear has dented the hopes of a US Fed rate cut in the near term.

Market experts said equities are falling due to inflation fears, which are expected to weigh on companies’ quarterly earnings in the short to medium term. However, gold and silver rates have fallen due to the petrodollar regime. Soaring crude oil prices and renewed fears of inflation have dimmed hopes of a US Fed rate cut in the near term. This has strengthened the US dollar, and, as a result, gold and silver prices have come under sharp selling pressure.

Why has the Indian stock market crashed?

On the reasons that led to the Indian stock market crash on Monday, Ponmudi R, CEO of Enrich Money, said, “The key overhang remains the US–Israel–Iran conflict, which is now directly impacting global energy flows. Heightened concerns around the Strait of Hormuz have pushed Brent crude above $110 per barrel, increasing inflationary risks and external vulnerabilities for India.”

The Enrich Money expert said that the Indian rupee continues to weaken, approaching the 94 mark against the US dollar, reflecting sustained external pressures. This depreciation is more than just a currency move—it is a macro signal that adds to inflation concerns and overall economic strain.

On how inflation risk would impact the Indian stock market, Anuj Gupta, a SEBI-registered market expert, said, “Escalation in the US-Iran war and soaring oil prices have renewed the inflation fear, which means weak earnings seasons in the upcoming quarters due to squeezing margins after a rise in the input cost due to inflation.”

Why are gold and silver rates falling today?

On the reasons dragging gold and silver rates today, Anuj Gupta said, “The renewed inflation fear has hit the hopes of a US Fed rate cut in the near term. This has fueled demand for the US dollar over the last three weeks following the outbreak of the US-Iran war. Due to the hawkish stance of the US Fed and other central banks worldwide, US Treasury yields and the US currency may outperform other assets. That’s why gold and silver prices are falling despite escalation in the US-Iran.”

However, both experts maintained that all three assets are moving in the same direction, but they are primarily driven by the US-Iran war and crude oil prices. On a secondary basis, the market is under pressure amid inflation fears, while gold and silver are under pressure amid hawkishness from the US Federal Reserve and other central banks.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.