Escalating geopolitical strife between the US and Iran propelled crude oil prices to new heights, delivering a body blow to gold and silver on Monday. Heightened inflation risks and prospects of sustained high interest rates have dimmed the luster of these traditional safe havens, leading to steep declines across domestic and international markets.
MCX data showed June gold contracts shedding 0.82% or 1,239 points to 1,50,113 rupees for 10 grams. Silver July futures cratered 1.94% or 4,863 rupees to 2,46,074 per kg. In over-the-counter trades, pure gold eased to 1,48,100 rupees per 10 grams from 1,50,263 last week, while silver dipped marginally to 2,40,120 rupees per kg.
Overseas, Comex gold fell 1.62% to approximately $4,569/oz by evening Indian time, with silver down 3% at $74.28/oz. The sell-off underscores investor caution amid uncertainties in Federal Reserve actions and Middle East developments.
Oil’s relentless climb raises the specter of cost-push inflation, constraining central bankers’ room to maneuver. Elevated rates make non-yielding assets like gold less attractive, amplifying downward pressure. Notably, gold has lost 12% since conflict erupted.
Eyes are on US initiatives to escort ships safely from the Hormuz Strait and any breakthroughs in diplomacy. These factors could temper oil’s ascent and revive bullion sentiment. Broader markets grapple with similar headwinds, highlighting interconnected risks in global commodities.
