Gold and silver prices volatile amid weak global cues, growing concerns over inflation, US Fed rate hike bets
AI Summary
Gold and silver prices showed mixed performance amid global market volatility, with MCX gold futures rising slightly while silver futures declined. Geopolitical tensions, particularly between the US and Iran, are contributing to inflation fears and potential interest rate hikes, which negatively impact gold prices. Investors should remain cautious as the dollar strengthens, making bullion more expensive for overseas buyers.
Gold and silver prices traded mixed, with volatility in morning trade on the MCX on Friday (17 July), amid weak global cues and tepid spot market demand.
MCX gold August futures were 0.26% up at ₹1,40,718 per 10 grams, while MCX silver September futures were 0.23% down at ₹2,15,512 per kg around 9:05 am.
In the previous session, the MCX gold August futures declined 1%, and the silver September futures contract plunged 2%.
In the US, gold prices looked set for their biggest weekly loss in six weeks on Friday, losing more than 3% for the week.
The biggest challenge for gold and silver is the US-Iran tension, which has lifted crude oil prices and revived inflation fears, in turn driving fears of rate hikes by the US Federal Reserve in the near future.
Gold is considered a hedge against inflation, but its price tends to fall when interest rates are high because investors turn to other safe-haven assets, such as bonds, since gold is a non-yielding asset.
On the geopolitical front, the US has expanded its airstrikes on Iran early Friday, as per reports. President Donald Trump on Thursday (local time) reaffirmed Washington's victory in the ongoing strikes against Iran.
"Gold is falling as escalating tensions in the Middle East have driven oil prices higher, keeping inflationary pressures and interest rate concerns at the forefront," Jigar Trivedi, Senior Research Analyst at IndusInd Securities, noted.
"The US launched multiple strikes against Iran this week, while Trump warned that the US could target the country's infrastructure. Iran responded by launching attacks on US bases in neighbouring countries, fueling fears of further escalation and a prolonged disruption to energy supplies from the region," Trivedi pointed out.
Meanwhile, the dollar index rose to 100.78 on Friday, making bullion expensive for buyers in overseas currencies. Crude oil prices continued trading near $85 per barrel.
(This is a developing story. Please check back for fresh updates.)
Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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