Gold and silver prices surged on Monday, extending a three-session rally after signs of a peace agreement between the United States and Iran triggered a sharp decline in crude oil prices.
Contrary to the traditional safe-haven trade, bullion prices rose even as geopolitical tensions eased. Markets instead focused on the impact of lower oil prices on inflation and interest rate expectations.
Oil prices tumble
The prospect of the reopening of the Strait of Hormuz, through which nearly 20% of global oil supplies pass, sent crude prices sharply lower.
Brent crude fell more than 4%, slipping below $85 a barrel.
Lower oil prices are expected to ease inflationary pressures, strengthening expectations that major central banks could maintain or ease interest rates. That reduces the opportunity cost of holding non-yielding assets such as gold.
Gold and silver prices
In international markets:
- Spot gold rose more than 2% to above $4,304 per ounce, its highest level since June 9.
- Silver gained over 3% to cross $70.07 per ounce.
On the MCX:
- August gold futures advanced ₹3,301 to around ₹1,53,829 per 10 grams.
- July silver futures surged ₹7,200 to ₹2,53,345 per kg.
MCX silver has gained nearly ₹18,000 per kg over the last three sessions.
Retail prices
Prices in physical markets were quoted at:
24-carat gold
- Delhi: ₹14,922 per gram
- Mumbai: ₹14,907 per gram
- Kolkata: ₹14,907 per gram
- Chennai: ₹15,119 per gram
Silver
- Delhi: ₹2,59,900 per kg
- Mumbai: ₹2,59,900 per kg
- Kolkata: ₹2,59,900 per kg
- Chennai: ₹2,69,900 per kg
Why silver is outperforming
Silver has risen faster than gold during the recent rally.
Apart from lower interest-rate expectations, the metal is also supported by its industrial uses.
Silver is widely used in:
- Electronics manufacturing
- Solar panel production
Improved supply conditions and a recovery in manufacturing activity could boost demand for the metal.
Focus shifts to central banks
Investors are now awaiting policy decisions from:
- US Federal Reserve
- Bank of Japan
- Bank of England
Markets expect the Federal Reserve to keep rates unchanged, though comments from new Fed Chair Kevin Warsh will be closely watched for clues on future policy.
Technical levels
According to analysts at Prithvi Finmart, MCX gold has support between:
- ₹1,49,700
- ₹1,48,650
Resistance was seen at ₹1,52,200, a level that has already been crossed as futures moved above ₹1,53,000.
Jewellery stocks gain
The rally in bullion prices also lifted jewellery shares.
Kalyan Jewellers rose as much as 11% during intraday trade to ₹382.30, supported by expectations that higher gold prices could improve inventory valuations.
TL;DR
Gold climbed above $4,300 an ounce and MCX silver surged ₹7,200 after lower oil prices following the US-Iran peace deal boosted expectations of softer inflation and stable interest rates.
AI Summary
- Spot gold crossed $4,304 an ounce.
- Silver rose above $70 an ounce and gained ₹7,200 on MCX.
- Brent crude fell more than 4% below $85 per barrel.
- Markets are pricing in lower inflation and stable interest rates.
- Kalyan Jewellers gained up to 11% during the session.
