Gold prices are climbing and headed for a weekly gain as investors remain optimistic about a U.S.-Iran peace deal despite renewed fighting. According to The Economic Times, U.S. gold futures for June delivery were steady at $4,709.90, with the metal set for a weekly rise on easing fears of inflation and higher interest rates. The recovery comes after gold prices experienced significant volatility, with international spot gold trading at $4,524 per ounce on Tuesday, down by $90 (around 2%) for the day as oil prices surged on escalating geopolitical risks in the Middle East region. The metal had closed with a weekly loss of 2% in the week ending May 1, marking its second straight weekly loss. Spot silver rose 0.8% to $79.10 per ounce, platinum gained 0.5% to $2,032.70, and palladium was up 0.1% at $1,482.50, showing broad-based precious metals strength.
The United States and Iran exchanged fire on Thursday in the most serious test yet of their month-long ceasefire, but Iran said the situation returned to normal while the U.S. said it did not want to escalate. As reported by The Economic Times, the renewed hostilities broke out as Washington was awaiting Iran's response to a U.S. proposal that would stop the fighting. Despite these developments, investors remain optimistic about a comprehensive agreement, with gold gaining as "oil prices retreated on reduction in geopolitical risk premium, after the U.S. confirmed that the ongoing fragile ceasefire between Iran is still intact, despite the skirmish that was seen at the start of this week," Kelvin Wong, a senior market analyst at OANDA, said. "Any signs of re-escalation of tension between the two of them, you will see gold prices seeing some form of profit-taking, or for short-term speculators to unwind their near-term net long position in gold," Wong added.
The U.S. Federal Reserve is expected to keep interest rates steady well into the future as it navigates a climate of considerable uncertainty. According to The Economic Times, Federal Reserve Bank of Cleveland President Beth Hammack said in a radio interview on Thursday she expects the central bank to hold interest rates steady well into the future. The decline in oil prices helped ease inflation concerns, reducing expectations of aggressive monetary tightening. Earlier, gold faced strong selling pressure as elevated energy costs fuelled inflation fears and supported higher interest rate expectations. Markets now await the monthly U.S. employment report due later in the day to assess how the Fed will move forward with monetary policy this year, with the data scheduled for 1230 GMT.
China's central bank loaded up on gold for an 18th straight month in April, data from the People's Bank of China showed on Thursday. As reported by The Economic Times, this continued accumulation by the world's second-largest economy adds to the bullish sentiment for gold. The SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.1% to 941.72 metric tons on Wednesday, showing mixed institutional demand patterns. Hong Kong Exchanges and Clearing (HKEX) is looking to relaunch gold futures, as the city pushes to become an international gold trading and storage hub amid volatile bullion prices driven by geopolitical tensions.
Gold prices in India showed signs of recovery on Wednesday, May 6, with 24-karat gold rates climbing above ₹1.5 lakh per 10 grams. According to Moneycontrol, the 24-karat gold rate in India stood at ₹1,49,620 per 10 grams, while 22-karat gold declined to ₹1,37,150 per 10 grams. The Chennai bullion market is mirroring global uncertainty but without sharp volatility, with prices consolidating rather than reacting strongly. Traders and investors are holding back from making aggressive bets as markets adopted a cautious stance amid the ongoing counting of votes for the Tamil Nadu election results. Despite these developments, gold has seen some pressure in recent weeks and remains down nearly 12% since the conflict began, though the Chennai market is showing resilience without sharp volatility. On Thursday, MCX gold rate for June futures contracts surged ₹1,265, or 0.83%, to ₹1,53,397 per 10 grams, while MCX silver price July futures jumped ₹6,505, or 2.57%, to ₹2,59,770 per kg.
