Gold prices experienced a marginal recovery on Friday, May 29, with COMEX gold for August delivery advancing as much as 2.09% to hit an intraday high of $4,627.10 per ounce, compared to the previous closing price of $4,532.40 per ounce. According to CNBC TV18, spot gold was down 1.1% to $4,406.81 per ounce on Thursday, as of 0236 GMT, falling to its lowest level since March 27. The precious metal's decline has been further accelerated by the disclosure of a preliminary informal document regarding a Memorandum of Understanding between Iran and the United States, which has driven gold prices to their lowest level since March 30. However, over the week, the contract grew marginally, suggesting some stabilization in precious metals markets.
According to Iranian sources, a preliminary informal document regarding a Memorandum of Understanding framework between Iran and the United States has been disclosed, covering issues such as the Strait of Hormuz, regional military deployments, and future agreement arrangements. The document outlines specific terms where the US pledges to lift the "naval blockade" against Iran and withdraw a portion of its military forces stationed in the surrounding region. In exchange, Iran will gradually restore commercial vessel traffic in the Strait of Hormuz to pre-escalation levels within one month, excluding military ships, with the management of vessel traffic and route arrangements jointly coordinated by Iran and Oman. The document indicates that if Iran and the US can reach a final agreement within 60 days, the terms could be ratified as a binding UN Security Council resolution. Reportedly, Iran emphasized that it will not take any practical steps until "tangibly verifiable" inspections are completed.
Both major crude oil benchmarks experienced significant declines, with WTI crude futures hitting a low of $87.77 per barrel, the lowest since April 22, while Brent crude fell to a low of $94.17 per barrel. As reported by Tradingkey, the de-escalation of geopolitical tensions has caused crude oil prices to plunge, reducing concerns about supply disruptions in the Strait of Hormuz. Over the week, Brent Crude oil contract (August delivery) fell 12%, amid rising hopes of an extension of the Iran-US ceasefire agreement. The futures contract hit a week's high of $97.81 per bbl on Tuesday, May 26, and touched the week's low of $89.93 bbl on Friday. On Friday, crude oil prices declined after US President Donald Trump, in a post on Truth Social, said he is in a meeting in the White House's Situation Room to make "final determination" over the proposal to extend the earlier Iran-US truce for another 60 days.
The dollar rose to a near one-week high, making greenback-priced bullion more expensive for holders of other currencies. According to CNBC TV18, oil prices rose about 2% in early Asian trade on Thursday, as tensions between the US and Iran persisted. Elevated crude oil prices can accelerate inflation and keep interest rates higher for longer. While gold is seen as a hedge against inflation, higher rates tend to weigh on the non-yielding metal. The combination of dollar strength and inflation concerns has created a challenging environment for precious metals. Further influencing precious metals are anticipated Fed policy statements and PCE inflation data, with robust inflation potentially increasing yields and the dollar, pressuring gold and silver. However, the US personal consumption expenditures (PCE) price index data, published on Thursday, showed that the PCE price index rose 3.8% year-on-year (YoY) in April, which was in line with expectations, providing some relief to inflation concerns.
Other precious metals also declined significantly, with spot silver falling by more than 3% to $74.63, platinum losing 0.8% to $1,902.66, and palladium sliding 1% to $1,376.66. According to CNBC TV18, Matt Simpson, a senior analyst at StoneX, noted that "geopolitical tensions remain high, and we've had too many false alarms from the peace deal talks. So I think the US dollar is going to remain bid, and that means gold is likely to remain under pressure." The broad-based decline across precious metals reflects the market's cautious stance amid the current geopolitical environment. In the international market, COMEX silver futures contracts for expiry in July closed in the negative territory for the third consecutive week, declining marginally over the past five days. Domestically, white metal futures also dropped, falling 2% this week on the MCX, touching an intraday low of ₹2,63,900 per kilogram on Friday, May 29, reflecting a ₹5,637 or 2.1% decline from the closing price of ₹2,69,537 per kilogram in the previous session.
