Gold prices fell 0.4% to $4,524 per ounce on Friday, extending losses for a second straight week as surging crude oil prices and renewed expectations of a US Federal Reserve rate hike dampened sentiment across bullion markets. US gold futures for June delivery eased 0.4% to $4,524.20, while silver remained under pressure with real-time data showing XAG/USD down 1.58% at $75.475 per ounce as of 20:19:30 GMT. According to Reuters, oil prices rose over 2% after Reuters reported that Iran's Supreme Leader issued a directive that the country's near-weapons-grade uranium should not be sent abroad. In India, MCX gold June futures declined Rs 501, or 0.31%, to Rs 1,59,105 per 10 grams, while MCX silver July futures dropped Rs 2,320, or 0.84%, to Rs 2,72,563 per kg. Despite Friday's weakness, MCX gold has gained 0.23% this week, while silver remained largely flat.
Markets are now pricing in a Fed rate hike before year-end, with traders seeing a 60% chance of at least one 25-basis-point interest rate hike by the U.S. Federal Reserve this year, compared with 48% a day earlier, as per CME's FedWatch Tool. Richmond Fed President Thomas Barkin indicated that the central bank's approach will depend on how businesses and consumers respond to ongoing economic shocks. The resilient job market and surging inflation from the war with Iran are providing the Fed with room to focus on addressing inflation concerns, with investors closely watching economic indicators and international developments that could impact monetary policy decisions. As UBS analyst Giovanni Staunovo noted, "Fundamentally, everything still revolves around negotiations between Iran and the United States, and within that context we have seen some uncertainty regarding the possibility of reaching an agreement. However, oil prices are now placing increasing pressure on gold."
U.S. Secretary of State Marco Rubio reported 'some good signs' in talks with Iran, though Tehran's uranium stockpile and control over the Strait of Hormuz remain sticking points. Ayatollah Mojtaba Khamenei's order could further frustrate U.S. President Donald Trump and complicate talks on ending the U.S.-Israeli war on Iran. The yellow metal has fallen more than 15% since the war started in late February, which has disrupted maritime traffic through the Strait of Hormuz, lifting energy prices and stoking inflation concerns. Bullion prices tracked global cues as Brent crude held above $105 per barrel amid uncertainty surrounding possible US-Iran peace negotiations, with higher oil prices fuelling inflation concerns and prompting traders to price in a higher probability of tighter monetary policy in the US.
The dollar rose, making greenback-priced bullion more expensive for other currency-holders, while the U.S. 10-year Treasury bond yield resumed its climb, increasing the opportunity cost of holding non-yielding bullion. Despite being an inflation hedge, gold struggles during periods of elevated interest rates. Other precious metals also declined, with spot silver down 0.8% at $75.39 per ounce, platinum losing 0.3% to $1,945.28, and palladium falling 0.4% to $1,374.74. The broad-based weakness across precious metals reflects the current market sentiment toward inflation and interest rate concerns, with investors closely monitoring economic indicators and international developments that could impact monetary policy decisions.
In Delhi's spot market, gold with 99.9% purity extended its gains for a third consecutive session, increasing by Rs 600 to reach Rs 1,65,500 per 10 grams, inclusive of all taxes, according to local traders. Saumil Gandhi noted that gold remained firm on Thursday after recovering from recent lows, supported by improving optimism surrounding diplomatic discussions between the U.S. and Iran. Silver prices also rebounded after falling for two straight sessions, rising Rs 5,000 to Rs 2,71,000 per kilogram as investors returned to the metal following the recent sharp decline. Additional support for silver came from softer U.S. Treasury bond yields, with MCX silver contracts for July 2026 delivery declining by Rs 1,617, or 0.6%, to Rs 2,73,266 per kilogram.
