Gold and silver futures plunged on Monday after peace-deal negotiations between the US and Iran fell through, leading to a jump in crude oil prices. This has reignited concerns about inflation and expectations that the US Federal Reserve may need to keep interest rates higher for longer.
In the international market, gold prices slipped more than 3% to trade around $4,119.17 per ounce during Monday’s session. Silver’s fall was more severe, losing over 4% to trade near $61 per ounce. A higher dollar and elevated US treasury yields are also weighing on market sentiment.
“Gold and silver are hammered this morning on the continued rise in bond yields. Gold is down just under $140 and silver is down almost $3. But a bond bear market is very bullish for precious metals, as it means a weaker U.S. economy, rising budget deficits, and higher inflation,” economist Peter Schiff wrote on X.
Sharp decline in gold and silver prices
Speaking on the sharp slide in gold and silver rates, experts highlighted why elevated crude rates failed to boost safe haven buying in the commodity.
“Elevated crude prices, rather than boosting gold’s safe-haven appeal as they typically would during geopolitical stress, are instead reinforcing the case for further Fed tightening, feeding a stronger dollar and steeper yield curve that both work against non-yielding bullion,” Ashish Rajodiya, Head – Commodities at PL Capital said in a note.
More than 68% of market participants are expecting the US Fed to increase interest rates again by 25 basis points in October, according to the CME FedWatch tool.
“The metal’s next move likely hinges on two threads converging at once: the Fed’s October rate decision, and whether the recent signs of renewed US-Iran diplomatic engagement on Hormuz firm up into an actual de-escalation. A dovish surprise from the Fed or confirmed progress on Iran talks could spark a sharp bounce toward resistance, while continued hawkish signals or a stalled Iran negotiation would likely extend the slide toward the lower support band,” Rajodiya said.
Gold, silver outlook in Indian markets
The sentiment is significantly under pressure even in Indian markets. The December gold futures contract on MCX was trading around 2% lower at Rs 150,600 per 10 grams while the same month silver futures was trading 2.4% lower at Rs 235, 643 per kg.
PL Capital’s Rajodiya said gold now has support at Rs 148,000 and Rs 146,000, with resistance at Rs 152,500 and Rs 155,000, in terms of gold rates in India.