Gold prices rose for a third straight session on Thursday, with spot gold up 0.3% at $4,701.19 per ounce as of 0231 GMT, after rising about 3% on Wednesday to hit its highest level since April 27. US gold futures for June delivery rose 0.4% to $4,710, supported by a softer dollar and growing hopes for a potential peace deal between the United States and Iran. The precious metals market is closely watching developments as Iran said on Wednesday it was reviewing a US peace proposal that sources said would formally end the war while leaving unresolved the key US demands that Iran suspend its nuclear programme and reopen the Strait of Hormuz. Spot silver rose 0.5% to $77.68 per ounce, while platinum was steady at $2,060.18 and palladium was down 0.1% at $1,536.54. Gold prices have fallen more than 10% since the war began in late February, making the recent gains particularly significant for investors.
MCX gold June futures were up 0.39% at ₹1,52,730 per 10 grams around 9:05 am on Thursday morning, showing continued momentum from the previous session's gains. MCX silver July futures were up more than 1% at ₹2,55,929 per kg at that time, significantly outperforming gold prices. Across major Indian cities, 24-karat gold rates ranged from ₹1,49,270 to ₹1,49,900 per 10 grams, with Mumbai showing the highest rate at ₹1,49,530 per 10 grams and Kolkata the lowest at ₹1,49,270 per 10 grams. 22-karat gold prices varied from ₹1,36,831 to ₹1,37,408 per 10 grams, with Chennai commanding the highest rate at ₹1,37,408 per 10 grams. Silver 999 Fine was priced between ₹2,42,520 and ₹2,43,980 per kg, with Chennai again leading at ₹2,43,980 per kg. On the MCX, gold futures fell nearly 1% over the past week to settle at ₹1.51 lakh per 10 grams, while silver outperformed, rising ₹879 to close at ₹2.50 lakh per kilogram during the past week.
The precious metals market is closely watching developments in US-Iran peace negotiations, with President Donald Trump stating in a conversation with Fox News that Iran will be "blown off the face of the earth" if it targets US ships protecting commercial vessels transiting the Strait of Hormuz. According to Reuters, Iranian state media reported that Washington conveyed its response to Iran's 14-point proposal via Pakistan, and that Tehran was now reviewing it. The Strait of Hormuz accounts for roughly 20% of the world's oil and liquefied natural gas consumption, making the chokepoint a critical concern for global energy markets. Trump also stated in a Truth Social post that a South Korean cargo ship had come under fire from Iran in the waterway, with the President writing "Perhaps it's time for South Korea to come and join the mission!" These significant geopolitical developments are bound to have a direct impact on global oil and commodity prices in the coming days, depending on how the ongoing Middle East tensions unfold.
Persistent inflation concerns continued to blur the outlook for US interest rates, with Federal Reserve Bank of Minneapolis President Neel Kashkari warning that the longer the Iran war goes on, the greater the risks of higher inflation and economic damage. Chicago Fed President Austan Goolsbee told Reuters that the latest inflation figures were disappointing and underscored the need for caution before considering any policy easing. Recent data showed that US inflation accelerated in March, with the Personal Consumption Expenditures Price Index rising 0.7% during the month, marking its biggest monthly increase since June 2022. The Personal Consumption Expenditures Price Index rose 0.7% during the month, driven in part by higher gasoline prices linked to the Iran conflict. Last week, the US Federal Reserve kept its interest rates unchanged while maintaining a hawkish stance, effectively dampening market expectations of any rate cuts this year. Investors now await the monthly US employment report on Friday to see if the US economy remains resilient enough to keep the Federal Reserve's monetary policy on hold.
The dollar edged down 0.1%, making bullion less expensive for holders of other currencies and supporting the recent gold rally. Benchmark 10-year US Treasury yields have eased 0.6% so far this week, lowering the opportunity cost of holding gold. Brent crude oil prices are down about 6% so far this week as optimism grew about a possible end to the war in the Middle East. As noted by Marex analyst Edward Meir, "I think most markets overreacted as (the deal) is still a work in progress and anything could unravel. Nevertheless, we saw enough dollar weakness to propel gold prices higher. Lower Treasury yields also boosted gold." Gold could remain rangebound in the near term, trading between $4,600 and $5,100 an ounce, according to Meir's analysis. Elevated crude oil prices can stoke inflation, increasing the likelihood of higher interest rates, which tends to weigh on non-yielding assets like gold despite its role as an inflation hedge.
