What’s driving gold and silver lower

Gold and silver prices declined on Friday (June 5), tracking global cues and extending weekly losses, as investors weighed geopolitical tensions in the West Asia against uncertainty over the US interest rate path.

Silver led the decline. COMEX silver fell 1.14% to $73.13 per ounce. Gold also eased, with COMEX gold slipping 0.50% to $4,482.60 per ounce, a decline of $22.40.

Both metals were on track for a weekly drop as risk sentiment remained mixed.

The weakness in precious metals came even as

geopolitical risks persisted.

Markets continued to assess developments in the West Asia after Iran-backed Hezbollah rejected a proposed ceasefire in Lebanon, while Israel signaled it would not withdraw troops. The developments have kept tensions elevated in the region, but have not translated into sustained safe-haven buying.

At the same time, expectations around US monetary policy remained a key driver. Federal Reserve officials struck a cautious tone, with Kansas City Fed President Jeffrey Schmid indicating the central bank may choose between holding rates steady or tightening further to contain inflation. San Francisco Fed President Mary Daly said policy remains “in a good place,” but stressed that future decisions will depend on economic data.

Higher interest rates typically weigh on non-yielding assets like gold and silver by increasing the opportunity cost of holding them, limiting upside despite geopolitical support.

Investors are now focused on the upcoming US non-farm payrolls report for May, along with unemployment and wage data, which could provide fresh cues on the Fed’s policy trajectory. Strong labor market readings could reinforce expectations of higher-for-longer interest rates, adding further pressure on bullion.

On the demand side, data showed that India’s gold exchange-traded funds recorded net outflows in May for the first time in a year, as investors booked profits after a sharp price rally driven in part by higher import duties. Industry estimates also suggest a shift in gold consumption patterns, with physical investment expected to overtake jewellery demand this year amid elevated prices.

Overall, bullion markets remain caught between persistent geopolitical risks, shifting interest rate expectations, and evolving demand trends, with upcoming US data likely to set the near-term direction.

-With Reuters inputs