Gold and silver prices have resumed their downtrend, dropping over 1% as fresh escalation in US-Iran tensions sent global crude oil prices higher. Despite a recovery in domestic gold prices, international markets remained weak. Market participants attributed the domestic uptick to a softer US dollar and renewed buying interest among investors. According to the CME FedWatch tool, traders now assign a probability of more than 70% to a Federal Reserve rate hike by December.
Gold Rate Today: Revival in Smuggling?
In India, a sharp increase in gold import duties has reportedly led to a revival in smuggling activity. Estimates suggest illicit inflows could surpass 100 metric tonnes this year as widening grey-market margins allow smugglers to offer gold at prices below those of banks and refiners.
Gold Price Round-Up from Monday
Gold prices bounced back on Tuesday, rising by Rs 1,500 to move above the Rs 1.60 lakh per 10 grams level in the national capital, supported by a softer US dollar and improved sentiment in the bullion market. According to local traders, gold of 99.9% purity advanced to Rs 1,60,300 per 10 grams, inclusive of taxes, compared with Monday's closing price of Rs 1,58,800 per 10 grams.
Silver Prices Drop Over 1%
Among other precious metals, spot silver declined 1.4% to $64.48 per ounce. Platinum fell 1.5% to $1,700.38, while palladium slipped 0.8% to $1,212.67 per ounce.
Crude Oil Gains 1%
A stronger US dollar added pressure on bullion prices by making gold more expensive for buyers using other currencies. Fresh geopolitical tensions emerged after the United States launched strikes on Iran on Tuesday. The action followed President Donald Trump's claim that Iran had shot down a US Apache helicopter near the Strait of Hormuz, further clouding prospects for a peace agreement and putting additional strain on an already fragile ceasefire. Crude oil prices gained around 1%, reviving fears that higher energy costs could fuel inflation and keep interest rates elevated for longer.
Gold Prices Drop Over 1%
Gold prices declined by more than 1% on Wednesday as rising crude oil prices, triggered by renewed tensions between the United States and Iran, heightened concerns about inflation and the possibility of further interest rate increases. Spot gold dropped 1.4% to $4,203.20 per ounce by 0050 GMT. The precious metal had already touched its lowest level since March 23 during Tuesday's session. US gold futures for August delivery also fell 1.4% to $4,227 per ounce.
Although gold is often viewed as a safeguard against inflation, higher interest rates generally reduce the appeal of the non-yielding asset. Investors are awaiting important US inflation data due this week, including the Consumer Price Index (CPI) report scheduled for release later on Wednesday and the Producer Price Index (PPI) data due on Thursday. The figures are expected to provide further clues on the Federal Reserve's policy direction.
Investor confidence had earlier improved after Iran and Israel agreed to suspend attacks, while remarks by US President Donald Trump suggesting progress towards a formal ceasefire strengthened hopes of a diplomatic solution to the conflict. However, fresh tensions have led to gold prices dropping.
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