Gold, silver extend losses amid Middle East tensions; Fed minutes in focus

Synopsis

Gold and silver prices declined significantly in Mumbai trading on Wednesday. This retreat followed global bullion market weakness and US President Donald Trump's comments. Crude oil prices surged, stoking inflationary concerns and impacting investor sentiment. Analysts noted that rising inflation and a stronger US dollar reduced gold and silver's appeal. Investors now await US Federal Reserve meeting minutes for interest rate guidance.

Kolkata: Gold and silver joined broader equity indices in a backloaded retreat through Wednesday's trading session in Mumbai, tracking weakness in global bullion markets. The retreat came after US President Donald Trump's comments at a NATO summit about the fate of the Iran truce caused crude oil to skyrocket and stoked inflationary concerns.

Multi Commodity Exchange (MCX) gold futures fell more than ₹1,150 to ₹1,45,767 per 10 grams, while silver futures plunged ₹3,250 to ₹2,35,317 per kg. Gold internationally had retreated 0.7% to $4,075 an ounce. Analysts said bullion prices are under pressure from renewed inflation concerns amid a strengthening US dollar, reducing the appeal of non-yielding assets such as gold and silver.

The escalation has raised concerns over the stability of the interim US-Iran peace pact with reports of attacks on tankers in the Strait of Hormuz adding to fears of disruptions to energy supplies. Higher oil prices have also fuelled expectations that inflation could remain elevated for longer, strengthening the case for the US Federal Reserve to keep interest rates higher for an extended period.

Investors are now closely watching the minutes of the US Federal Reserve's June 16-17 policy meeting for fresh guidance on the central bank's rate trajectory.

Market expectations of a September rate hike have strengthened in recent sessions as rising oil prices and a firmer dollar fuel concerns over persistent inflation.

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