Gold, silver futures fall on ceasefire optimism

Commodity Desk

MUMBAI

Gold and silver futures traded lower on Wednesday as investors assessed developments in the ongoing US-Iran conflict and shifting expectations around US interest rates. While geopolitical tensions usually support safe-haven demand, signs of potential diplomatic progress and rising inflation concerns weighed on precious metals.

  On the MCX, gold futures for August delivery fell by ₹562, or 0.35%, to ₹1,58,784 per 10 grams. The decline mirrored weakness in international markets, where Comex gold futures for August delivery dropped nearly 1% to $4,482.30 per ounce.  Market participants remained focused on fresh developments in West Asia. 

  Concerns over the durability of a ceasefire arrangement resurfaced after new military actions were reported between the US and Iran. Iran subsequently launched missile strikes towards regional locations hosting US military assets.  Higher crude oil prices resulting from the conflict have raised concerns about inflationary pressures, which could force the US Fed to maintain higher interest rates for longer.

   Higher interest rates typically reduce the appeal of non-yielding assets such as gold. Silver futures also witnessed sharp selling pressure. The July silver contract on MCX dropped ₹2,757, or 1.03%, to ₹2,63,950 per kg. In the international market, Comex silver futures for July delivery declined 1.36% to $74.52 per ounce. Analysts said silver was affected by the same factors impacting gold, including elevated oil prices, inflation worries and uncertainty over US-Iran negotiations.  

(With inputs from PTI)