Precious metals are holding ground as US President Donald Trump said that the US could end the war with Iran and leave the country within two to three weeks.
Trump’s statement proved to be especially crucial for the precious metals market, as spot gold rose to its weekly highs, climbing over the $4,700/oz mark and currently trading near $4,680/oz levels. Silver prices also extended gains, as they were quoted near the $75/oz mark and are currently priced at $74/oz levels.
American Economist, Peter Schiff in a social media post on X remarked that despite March being the worst ever month for gold since 2008, it has rallied by nearly 15% this week and it is likely that April may prove to be the best ever month for the yellow metal since 1980
Despite the gains in early trade, prices of precious remain on track for their worst-ever monthly performance in over 14 years.
Oil prices remain elevated
Trump’s claims of leaving Iran and wrapping up the prolonged West Asia conflict helped steady oil prices slightly. Brent crude was quoted near $105/bbl, while US crude, WTI, was trading near $102/bbl levels.
However, the US President added that Washington would not take control of the crucial trade route—the Strait of Hormuz—which remains under Tehran’s control. Global energy flows remain disrupted, as the waterway passage remains largely closed.
Oil prices have steadied from their monthly record-high levels but remain elevated, which has globally stoked inflationary concerns.
High oil prices continue to weigh on bullion, as intensified concerns over inflation have prompted markets to reassess interest rate expectations. Currently, there are no expectations of a rate cut by the US Federal Reserve this year. Prior to the war, markets were pricing in two rate cuts by the central bank.
High interest rates reduce the opportunity cost of holding non-interest-yielding assets like gold and silver.
Dollar index moves down slightly, adding to gains for gold and silver
The dollar index, which was trading near the 100 mark over the past few trading sessions, slipped to the 99 level, which helped push up the prices of gold and silver. A soft dollar makes precious assets less expensive for holders of other currencies, thereby increasing demand.
However, the index, which gauges the strength of the greenback against a basket of six major currencies, continues to trade near its monthly record-high levels.
MCX Gold and Silver futures in green
On Tuesday, MCX futures for both precious metals ended the evening trading session in the green. The April delivery contract for gold was up nearly 1%, last quoted at Rs 1,48,150 per 10 grams, while MCX silver futures for May rose by more than 5%, valued at Rs 2,41,456 per kg.
Analysts added that despite precious metals logging their worst-ever monthly declines, the fundamentals remain strong and there is still scope for further upside.