Gold and silver prices showed mixed movements in Indian markets on Friday (May 29), with MCX gold price dropping to ₹1,56,316 per 10 grams amid profit booking activities, while MCX silver fell by ₹1,322 to ₹2,68,215 per kg as participants reduced their bets. The precious metals market displayed resilience despite earlier declines, with 24-carat gold falling ₹600 to ₹1,58,290 per 10 grams and 22-carat gold decreasing by ₹550 to ₹1,45,100 per 10 grams in previous sessions. Silver prices also declined by ₹100 to ₹2,84,900 per kilogram in Delhi, Kolkata, and Mumbai, while Chennai recorded ₹2,94,900 per kilogram. The latest price movements came as spot silver rose 0.7% to $76.17 per ounce and spot gold gained 0.4% to $4,512.79 per ounce in early trade, as reported by Reuters.
Gold prices have dropped on the MCX amid expectations of a US Federal Reserve rate hike this year, driven by higher oil prices and increased inflationary pressures. According to Bloomberg reports, bullion slipped as much as 1.1% as bond yields and the dollar climbed. The rate hike expectations come as traders have now fully priced a quarter-point rate hike by December for the first time, with higher rates typically weighing on gold as it pays no interest. As StoneX analyst Rhona O'Connell noted, market participants are "a bit like a rabbit in the headlights, fixed upon Hormuz and by association, disrupted supply chains across the board, which in turn is leading to inflationary fears and concerns about potential interest rate rises." The latest price decline reflects market positioning ahead of potential monetary policy changes.
The precious metals market found support from reports of a potential extension of the ceasefire between the United States and Iran, with US gold futures climbing 0.2% to $4,543.10 per ounce and US gold futures for August delivery trading higher by 0.4% at $4,516.09 per ounce. According to LiveMint, the gains came as the US dollar remained under pressure against major global currencies after reports suggested that Washington and Tehran had reached an agreement to extend the ceasefire in the Middle East and remove restrictions on shipping through the Strait of Hormuz. A weaker dollar typically supports precious metals because it makes commodities priced in US currency cheaper for holders of other currencies, thereby boosting demand. The yellow metal had fallen to a two-month low on Thursday before recovering and ending the session higher after reports emerged that the ceasefire agreement between the US and Iran could be extended, though uncertainty remains as US President Donald Trump has not yet approved the arrangement.
Domestic silver futures experienced a significant decline on Friday as participants reduced their market positions. Silver prices on Friday fell by ₹1,322 to ₹2,68,215 per kilogram as participants reduced their bets, with July contracts declining by ₹1,322, or 0.49 per cent, to ₹2,68,215 per kg on the Multi Commodity Exchange. According to The Hindu BusinessLine, the decline was primarily driven by a sell-off by participants, with business turnover of 749 lots recorded for the July delivery contracts. Globally, silver was trading 0.12 per cent higher at $75.71 per ounce in New York, highlighting the divergence between domestic and international silver markets. This domestic decline contrasts with the earlier support from geopolitical developments, suggesting that local market participants are taking a more cautious stance on precious metals.
