Gold prices are on track for a third weekly decline as MCX gold futures declined ₹3,325, or 2.2% to close at ₹1.47 lakh per 10 grams, according to Business Standard. The precious metals continue to face headwinds as investors turn cautious ahead of the US Federal Reserve's policy decision, with spot gold trading near $4,245.9 per ounce after surrendering most of its early gains. Ravi Singh, Chief Research Officer at Master Capital Services, noted that MCX gold futures settled almost flat at ₹1.53 lakh per 10 grams in the previous session and continue to trade below their 21-day and 55-day exponential moving averages, indicating that the short-term trend remains weak. The ₹1.54 lakh-₹1.55 lakh per 10 grams zone remains a key resistance area for gold, with a sustained move above these levels potentially improving momentum and triggering further recovery.
The Federal Reserve maintained a cautious tone on monetary policy despite keeping interest rates unchanged, with nine of the US central bank's 19 policymakers now believing they will need to raise the policy rate this year, according to Reuters projections published after the Fed's decision to leave the policy rate in its current 3.50%-3.75% range in Kevin Warsh's debut policy meeting as chairman. Markets are currently pricing in an 87% chance of a rate increase by December, jumping from 61% prior to the Fed decision, as reported by the CME FedWatch Tool, a factor that has strengthened the dollar and weighed on bullion prices. Goldman Sachs no longer anticipates a Fed rate cut this year and now projects that gold prices will increase to $4,900 per ounce by December, down from its previous estimate of $5,400. Spot gold traded around $4,270 per ounce after touching an intraday high of $4,330, while spot silver hovered near $68.30 after climbing as high as $69.85 earlier in the session. Tim Waterer, chief market analyst at KCM Trade, noted that "Gold's rally on the back of the US-Iran peace deal proved short-lived. The resurgent dollar, powered by the Fed's newly hawkish tone under Kevin Warsh, has stolen the spotlight."
Markets continued to assess developments surrounding US-Iran negotiations scheduled in Burgenstock, Switzerland, where US Vice President J D Vance is expected to lead discussions with Iranian officials to build on last week's framework agreement aimed at ending hostilities and reviving nuclear negotiations, as reported by Business Standard. The US-Iran framework signed last week has set a 60-day deadline for negotiators to reach an agreement on the technical details, making the upcoming discussions a closely watched event for commodity markets. U.S. President Donald Trump said the deal would prevent Tehran from acquiring a nuclear weapon, while a U.S. official indicated that Iran would be allowed to resume oil sales once the agreement is signed, as reported by The Economic Times. As per a Bloomberg report, the fears of protracted energy shortages were allayed when the US announced an end to the blockade, and commercial ships started to resume passage to the Strait of Hormuz. Meanwhile, Iran said it had closed the Strait of Hormuz following fresh Israeli strikes in Lebanon, though the US Central Command disputed the claim and said shipping through the strategic waterway continued uninterrupted, helping ease concerns around inflation. The gold silver rates today are influenced by three converging tailwinds: the Bank of Japan rate hike, the US-Iran peace deal creating dollar weakness, and upcoming Fed meeting uncertainty.
The Bank of Japan's decision to raise interest rates by 25 basis points to 1% on June 16 has provided fresh momentum to bullion prices, with the BOJ rate hike strengthening the Japanese yen and weakening the US dollar index to near 99.5, according to Univest. This development creates a favorable environment for gold prices in dollar terms, while gold prices in rupee terms (MCX gold) remain supported above ₹1.52 lakh per 10 grams. The dollar hovered around a one-year high, making greenback-priced bullion more expensive for other currency holders, as reported by The Hindu BusinessLine. The US-Iran peace deal, announced June 15 with a formal signing scheduled June 19, has created a complex dynamic for gold by reducing geopolitical risk while simultaneously weakening the US dollar sharply, which historically represents gold's strongest single driver. On June 15, spot gold rose 2.1% to above $4,300 per troy ounce even as crude oil fell 4.55%, demonstrating the divergent impact of these geopolitical and monetary policy developments.
Silver slumped ₹13,001, or 5.3% to settle at ₹2.33 lakh per kilogram on MCX, while globally, Comex silver fell 2.03% to $66.32 per ounce in New York, according to Business Standard. Platinum and palladium also declined, with platinum losing 1.3% to $1,674.47 and palladium down 0.8% at $1,268.65. Pranav Mer, Vice President at EBG - Commodity & Currency Research, JM Financial Services Ltd, noted that "Gold and silver momentum looks sideways/corrective as focus will remain on the negotiation between Washington and Tehran and also on the flow of crude oil, LNG and raw materials from the Strait of Hormuz." Jateen Trivedi, VP Research Analyst at LKP Securities, explained that "Gold remained under pressure throughout the week, ending nearly 2.2% lower as the precious metals faced headwinds from a combination of falling energy prices, a stronger Indian rupee, and a hawkish policy stance from the US Federal Reserve." A stronger rupee lowers the landed cost of imported gold, creating additional pressure on precious metals prices. Domestic commodity markets will remain closed during the morning session on Friday on account of Muharram, which may contribute to reduced trading activity. Despite current weakness, Kotak Securities noted that the near-term outlook remains mixed, but resilient physical demand and strategic buying should help limit downside risks despite a more hawkish monetary policy backdrop.
