Gold and silver prices have bounced back after US President Donald Trump agreed to a two-week ceasefire plan with Iran, reopening the crucial trade route—the Strait of Hormuz. The precious metals markets saw a recovery as oil prices slipped below the $100/bbl mark.
In international markets, spot gold rose 2%, climbing above the $4,800/oz mark, as US President Donald Trump agreed to suspend bombing on Tehran, while silver extended sharper gains, rising 4% above the $76/oz level, as reopening of the Hormuz route—which transits nearly 20% of the world’s global energy flows—lifted investor sentiment.
Gold and silver gain as oil prices slip
Oil prices fell nearly 13%, below the $100/bbl mark, as markets quickly reacted to the news of reopening the Strait of Hormuz. US crude futures, West Texas Intermediate (WTI), fell 19%, marking one of its biggest declines since 2020.
WTI was last quoted near the $96/bbl mark, while the global oil benchmark, Brent crude futures, also saw relief, trading near the $94/bbl level.
Easing fuel prices helped lift inflationary concerns, which boosted sentiment for precious metals.
Dollar index climbs down from record high
As optimism over the ceasefire news emerged, the dollar index climbed down sharply from its record high and was down nearly 0.6% on the day, quoted near the end of the 98 mark.
A soft dollar boosts demand for precious assets like gold and silver, making them less expensive for other currency holders.
MCX gold and silver rise
Following the global cues, MCX gold futures for June were up over 2% in early trade, quoted at Rs 1,53,389 per 10 grams. While MCX silver futures for May were up more than 5%, trading at Rs 2,43,573 per kg.
Long-term pressure persists for precious metals
Despite the short rally, precious metals remain down from their January high levels. Gold prices have fallen by nearly 25% from their January highs of $5,600/oz, while silver, being the more restless asset, has declined by 37% from its peak of $120/oz.
“This is a knee-jerk relief rally, and it remains to be seen if Iran complies. For gold, the 200-day moving average at $4,930 and then $5,000 will be key hurdles. Similarly, $80-$81 is an important level for silver,” Reuters quoted Tai Wong, an independent metals trader, as saying.