COMEX gold falls over 1%, silver slumps nearly 3%: Why bullion prices are under pressure

Gold and silver prices fell in international markets on Monday (May 18), tracking a stronger US dollar, rising bond yields and broad risk aversion as escalating tensions in the Gulf rattled global financial markets.

COMEX gold dropped 1.18% to $4,508 per ounce, while silver slumped 2.7% to $75.455 per ounce in early trade after both metals posted steep weekly declines.

The decline in bullion came as investors reacted to worsening geopolitical tensions in the West Asia after fresh drone attacks in the Gulf intensified concerns over energy supplies and inflation. A drone strike triggered a fire at a nuclear power plant in the United Arab Emirates, while Saudi Arabia said it intercepted three drones.

At the same time, the Strait of Hormuz — a critical route for nearly one-fifth of global oil trade — remains heavily restricted, fuelling fears of a prolonged supply shock.

Brent crude rose 1.2% to $110.63 a barrel, while US crude climbed 1% to $106.42, extending last week’s rally. Analysts warned that a prolonged disruption in the Strait of Hormuz could push oil prices as high as 130-140$ per barrel, significantly worsening global inflation pressures.

Rising oil prices and inflation concerns triggered a sharpselloff in global bond markets.

US 10-year Treasury yields stood at 4.58% after surging 23 basis points last week, while 30-year yields remained above 5%. Higher yields typically reduce the appeal of non-interest-bearing assets such as gold and silver.

Bullion prices were also pressured by expectations that the US Federal Reserve could keep interest rates elevated for longer. Markets are now pricing in a near 50-50 chance of another rate hike this year as inflation risks intensify due to higher energy costs.

Despite gold’s traditional safe-haven status, analysts noted that investors largely shifted toward the US dollar amid heightened uncertainty. The dollar remained firm against major currencies, with the euro and pound both under pressure after steep weekly losses.

Last week, COMEX gold futures declined 3.6%, while silver futures fell more than 4%. Analysts attributed the weakness to rising global inflation readings, stronger US economic data and a jump in bond yields.

Domestic bullion prices, however, continued to remain elevated due to India’s recent import duty hike and restrictions on silver imports. On the Multi Commodity Exchange (MCX), gold futures surged nearly 4% last week to settle at ₹1.58 lakh per 10 grams, while silver futures gained 3.8% to close at ₹2.71 lakh per kg.

Market participants are now closely watching the release of minutes from the US Federal Reserve’s latest policy meeting, key US economic data and earnings from chip giant Nvidia later this week, which could influence broader market sentiment and demand for safe-haven assets.

-With agencies inputs