Gold and silver prices experienced significant declines on Monday as a sharp surge in crude oil prices weighed on sentiment across commodity markets. According to reports from The Economic Times, spot gold fell 1.56% to $4,468.67 an ounce as of 22:08 IST, while silver also retreated amid the broader commodity market selloff. The decline came as oil prices jumped amid renewed geopolitical concerns in the Middle East, triggering a broader reassessment of positions across commodity markets.
The decline in gold was particularly pronounced, with the yellow metal touching an intraday low of $4,447.81, down more than 2% from the day's high of $4,546.03. As reported by The Economic Times, this strong intraday selloff highlighted the intensity of the profit-booking pressure following recent rallies in precious metals. Silver also edged lower, with US spot silver declining 0.72% to $74.736 per ounce as of 22:08 IST, though losses remained relatively contained compared with gold. Recent data shows silver has slipped over 1% day-on-day, trading near $74 compared to its January record near $121.
On the domestic front, MCX Gold futures for June delivery fell Rs 1,775, or 1.14%, to Rs 1,53,518 per 10 grams as of 22:09 IST. During the session, the contract traded between Rs 1,53,217 and Rs 1,55,297, with open interest data indicating long unwinding, suggesting traders were cutting bullish positions amid the broader commodity market correction. MCX Silver futures also slipped Rs 2,176, or 0.81%, to Rs 2,66,462 per kilogram at 22:06 IST, moving within the day's range of Rs 2,62,100 to Rs 2,68,684.
The decline in precious metals came as oil prices jumped amid renewed geopolitical concerns in the Middle East, triggering a broader reassessment of positions across commodity markets. According to The Economic Times, this surge in crude oil prices prompted investors to book profits in precious metals after their recent rally, creating downward pressure on both gold and silver prices. On Monday, Iranian state media said Tehran had suspended talks with the US and vowed to fully close the Strait of Hormuz, which carries about a fifth of the world's oil. Crude Oil (WTI) rose more than 5% on June 1, reversing a stretch of declines built on ceasefire hopes, with the WTI surge now over 8% week-on-week.
The latest decline in gold comes as traders are pricing in Federal Reserve interest rate increases, with 39% probability of a quarter point increase in December according to CME Group's FedWatch. As reported by ActivTrades analyst Ricardo Evangelista, the optimism around U.S.-Iran negotiations waned over the weekend, with energy prices rising and reinforcing Federal Reserve expectations. Brent crude oil has increased by more than 3% since the last strikes, with higher oil prices potentially increasing inflation and causing interest rates to remain high for longer. Gold, traditionally seen as an inflation hedge, becomes less attractive as a non-yielding asset in a high interest rate environment.
