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What is the story about?
Gold traded cautiously while silver remained under pressure on India’s Multi Commodity Exchange (MCX) on May 21, as global bullion markets turned volatile amid shifting US interest rate expectations and developments around US-Iran negotiations.
MCX silver extended losses in early trade, touching an intraday low of ₹2.71 lakh per kg, down ₹2,291 or 0.83%. Although the metal later recovered part of its losses, it continued to trade in the red and underperformed gold at the time of writing.
The weakness tracked global trends, with spot silver declining nearly 0.8% to $75.40 per ounce.
Gold prices, meanwhile, showed relatively limited movement despite fluctuations in international markets. Spot gold slipped 0.2% to $4,534.69 per ounce, while US gold futures for June delivery remained largely unchanged at $4,536.70 an ounce.
Global bullion sentiment remained mixed after US President Donald Trump said negotiations with Iran were in the final stages, raising hopes of a possible peace agreement and reducing some safe-haven demand for precious metals.
However, concerns over potential military escalation and supply disruptions in the Strait of Hormuz continued to support oil prices and inflation expectations.
Analysts said the market was balancing easing geopolitical tensions against persistent inflation concerns, resulting in choppy price action across precious metals.
Kelvin Wong, Senior Market Analyst at OANDA, said sentiment improved following signs of progress in US-Iran negotiations, but rising US Treasury yields continued to limit upside in gold prices. He noted that the broader trend in Treasury yields remained upward, reducing aggressive buying interest in non-yielding assets such as gold.
Higher Treasury yields increase the opportunity cost of holding bullion, which typically performs better in a lower interest rate environment. Gold prices have fallen more than 14% since the Iran conflict escalated in late February, as elevated oil prices intensified inflation concerns and reinforced expectations that interest rates could remain higher for longer.
Markets are pricing in the possibility of tighter US monetary policy later this year. According to CME Group’s FedWatch tool, traders currently see a 39% probability of a 25 basis-point rate hike in December.
Minutes from the US Federal Reserve’s April meeting showed that a majority of policymakers believed additional policy tightening may become necessary if inflation remains above the central bank’s 2% target.
According to Manav Modi, Commodities Analyst at Motilal Oswal Financial Services, gold prices steadied after sharp swings in the previous session as markets continued to assess developments around a potential US-Iran peace agreement.
He said a softer US dollar and easing Treasury yields after the recent global bond market sell-off offered some support to precious metals. However, concerns around energy-driven inflation and expectations of a hawkish stance from central banks continued to cap gains.
Modi added that investors are now closely monitoring developments in US-Iran negotiations, oil price movements, inflation trends, and upcoming manufacturing and services PMI data from major economies for further direction in commodity markets.
-With Reuters inputs
MCX silver extended losses in early trade, touching an intraday low of ₹2.71 lakh per kg, down ₹2,291 or 0.83%. Although the metal later recovered part of its losses, it continued to trade in the red and underperformed gold at the time of writing.
The weakness tracked global trends, with spot silver declining nearly 0.8% to $75.40 per ounce.
Gold prices, meanwhile, showed relatively limited movement despite fluctuations in international markets. Spot gold slipped 0.2% to $4,534.69 per ounce, while US gold futures for June delivery remained largely unchanged at $4,536.70 an ounce.
Global bullion sentiment remained mixed after US President Donald Trump said negotiations with Iran were in the final stages, raising hopes of a possible peace agreement and reducing some safe-haven demand for precious metals.
However, concerns over potential military escalation and supply disruptions in the Strait of Hormuz continued to support oil prices and inflation expectations.
Analysts said the market was balancing easing geopolitical tensions against persistent inflation concerns, resulting in choppy price action across precious metals.
Kelvin Wong, Senior Market Analyst at OANDA, said sentiment improved following signs of progress in US-Iran negotiations, but rising US Treasury yields continued to limit upside in gold prices. He noted that the broader trend in Treasury yields remained upward, reducing aggressive buying interest in non-yielding assets such as gold.
Higher Treasury yields increase the opportunity cost of holding bullion, which typically performs better in a lower interest rate environment. Gold prices have fallen more than 14% since the Iran conflict escalated in late February, as elevated oil prices intensified inflation concerns and reinforced expectations that interest rates could remain higher for longer.
Markets are pricing in the possibility of tighter US monetary policy later this year. According to CME Group’s FedWatch tool, traders currently see a 39% probability of a 25 basis-point rate hike in December.
Minutes from the US Federal Reserve’s April meeting showed that a majority of policymakers believed additional policy tightening may become necessary if inflation remains above the central bank’s 2% target.
According to Manav Modi, Commodities Analyst at Motilal Oswal Financial Services, gold prices steadied after sharp swings in the previous session as markets continued to assess developments around a potential US-Iran peace agreement.
He said a softer US dollar and easing Treasury yields after the recent global bond market sell-off offered some support to precious metals. However, concerns around energy-driven inflation and expectations of a hawkish stance from central banks continued to cap gains.
Modi added that investors are now closely monitoring developments in US-Iran negotiations, oil price movements, inflation trends, and upcoming manufacturing and services PMI data from major economies for further direction in commodity markets.
-With Reuters inputs
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