Gold and silver remained under pressure on June 5, 2026, with investors focusing more on inflation and interest rate expectations than on geopolitical tensions in West Asia.
Contrary to the traditional safe-haven pattern, precious metals weakened as the ongoing US-Iran conflict fuelled concerns about higher energy prices and persistent inflation, reinforcing expectations that the US Federal Reserve could keep interest rates elevated for longer.
On the domestic market, MCX Gold Futures (August contract) fell around 1% to ₹1,58,213 per 10 grams, while MCX Silver Futures (July contract) declined by more than ₹5,600, or about 2%, to ₹2,59,167 per kg.
In international markets, spot gold traded at $4,452.20 per ounce, down around 1.8% for the week, while spot silver fell to $72.89 per ounce.
Inflation concerns overshadow safe-haven appeal
Higher crude oil prices have emerged as a key factor behind the decline in precious metals. Continued tensions involving Iran, along with missile-related disruptions affecting areas including Kuwait and Bahrain, have kept energy markets volatile.
Rising oil prices tend to strengthen inflation expectations. In turn, expectations of persistent inflation reduce the likelihood of interest rate cuts and increase the attractiveness of yield-bearing assets relative to gold and silver.
Federal Reserve officials have reinforced this outlook. Cleveland Fed President Beth Hammack and Kansas City Fed President Jeffrey Schmid indicated that rates may need to remain elevated or move higher if oil-related inflation persists.
The US Dollar Index remained firm near 99.4, adding further pressure on dollar-denominated precious metals.
Diplomatic developments add to volatility
Markets also reacted to mixed signals from the Middle East.
Although President Donald Trump expressed optimism about a possible interim agreement with Tehran, hopes of easing tensions were tempered after Hezbollah rejected a new ceasefire proposal in Lebanon and Israel opposed troop withdrawals.
The developments prompted investors to liquidate commodity positions rather than seek refuge in gold.
Technical outlook
Market participants are now closely watching the upcoming US Non-Farm Payrolls (NFP) data, which could influence expectations regarding Federal Reserve policy.
According to Manoj Kumar Jain of Prithvi Finmart, investors may consider booking profits during temporary rallies rather than adding fresh positions.
For spot gold:
- Support lies between $4,420 and $4,467 per ounce
- Resistance is seen in the $4,535-$4,580 per ounce range
- A weekly close above $4,680 per ounce would be required to improve the technical outlook
For silver:
- Support is placed between $69 and $72 per ounce
- Resistance is seen at $76.60-$78.80 per ounce
Long-term outlook remains positive
Despite the recent correction, major global institutions continue to maintain bullish views on gold.
J.P. Morgan Global Research has projected a year-end 2026 gold price target of $5,055 per ounce, citing:
- Central bank purchases estimated at about 190 tonnes per quarter
- Renewed ETF inflows
UBS has a more optimistic target of $5,900 per ounce by December 2026, supported by:
- Physical investment demand
- Expansion in sovereign debt
- Long-term currency debasement trends
Consultancy Metals Focus expects investment demand for gold bars and coins to exceed jewellery demand globally in 2026, as elevated prices continue to weigh on jewellery consumption while investment demand remains resilient.
TL;DR:
Gold and silver extended weekly losses on June 5 as inflation concerns and expectations of prolonged US interest rates overshadowed their safe-haven appeal. Despite the near-term weakness, major banks remain bullish on gold’s long-term outlook.
AI summary:
- MCX gold fell 1% to ₹1,58,213 per 10 grams.
- Silver dropped around 2% to ₹2,59,167 per kg.
- Elevated oil prices are strengthening inflation expectations and supporting higher interest rates.
- Investors are awaiting US Non-Farm Payrolls data.
- J.P. Morgan and UBS continue to forecast higher gold prices over the longer term.
