Gold and silver prices experienced a dramatic decline on Monday, 4 May, with COMEX gold futures dropping $134 per troy ounce to an intraday low of $4,681, marking the lowest level in a month. According to reports from Live Mint, silver futures fell $4 to $72, erasing most of their recent gains. The sharp correction has brought the yellow metal's year-to-date gains down to 4.50%, while from its yearly high, gold is now lower by 24.5%. Latest retail data from Kumbakonam shows silver trading at ₹2,396 per 10 grams, reflecting the broader market volatility across different trading centers.
The price decline was triggered by renewed tensions in the Middle East, with Iran's semi-official Fars news agency reporting that two missiles had struck a US warship near the port of Jask. As reported by Live Mint, US Central Command denied the report, stating "No U.S. Navy ships have been struck. U.S. forces are supporting Project Freedom and enforcing the naval blockade on Iranian ports." Iran's military had earlier warned US forces not to enter the Strait of Hormuz after President Donald Trump announced plans to help free ships stranded in the Gulf by the US-Israeli war on Iran.
The renewed tensions have dimmed hopes for a swift resolution to energy supply disruptions, which have been fuelling inflationary pressures. According to Live Mint, the likelihood of higher interest rates has increased, with many global brokerage firms now expecting no rate cuts from the Federal Reserve this year. Last week, the Fed left rates unchanged in its most divided decision since 1992 amid deepening concerns about higher energy prices filtering through the economy.
The rebound in the US dollar index is also impacting the metals rally, as a stronger dollar makes dollar-denominated commodities more expensive for holders of other currencies. As reported by Live Mint, the index rose to 98.4, rebounding from the near two-month lows touched last week. Tracking weakness in the international market, the near-month gold futures contract on MCX fell ₹2,592, breaking below ₹1.49 lakh to ₹1,48,760 per 10 grams, while silver futures crashed ₹9,824 per kilogram to the day's low of ₹2,41,113. Domestic retail rates in Kumbakonam show silver trading at ₹2,39,638 per kg, reflecting the broader market volatility across different trading centers.
Looking ahead, investors' focus will be on several speeches from Federal Reserve officials and a slate of key economic data releases, including the closely watched jobs report. According to Live Mint, bullion is traditionally viewed as an inflation hedge, but higher interest rates reduce its appeal as a non-yielding asset. The current market volatility reflects the complex interplay between geopolitical tensions, energy supply concerns, and monetary policy expectations affecting precious metals pricing across different trading centers and retail markets.
