Gold and silver prices rebounded on Tuesday, 14 July, as softer-than-expected US inflation and a sharp decline in crude oil prices boosted sentiment for safe-haven assets, prompting investors to return to precious metals after largely shunning them amid renewed tensions in the Middle East.
Comex gold futures climbed $107 per troy ounce to an intraday high of $4,112, fully recovering the previous session’s losses, if the gains hold through the close. Comex silver futures also regained momentum, rising $2 per troy ounce to touch an intraday high of $60.
In the previous session, the white metal had ended with a loss of $2.20. Investor concerns over the prospect of higher interest rates by the US Federal Reserve eased after US consumer prices posted their largest monthly decline in more than six years in June.
The Consumer Price Index (CPI) fell seasonally adjusted 0.4% in June, bringing the annual inflation rate down to 3.5%, below the Street’s estimate of 3.8%. Rising energy prices had earlier fuelled concerns that the Fed might deliver multiple rate hikes this year, weighing on demand for gold and silver, which do not offer any yield.
Although traders continue to expect a Fed rate hike in September, the odds have fallen to 63% from more than 75% a day earlier, according to the CME FedWatch Tool.
Meanwhile, the US dollar index slipped more than 0.5% to around 100.7 following the softer-than-expected inflation data, providing additional support to precious metals.
Middle East tensions remain in focus
US President Donald Trump backed away from his proposal to impose a 20% protection fee on ships transiting the Strait of Hormuz. The reversal came a day after Trump said the US military would keep the strategic waterway open while seeking a payment equivalent to 20% of the value of all cargo shipped through the strait.
“I have decided to replace the 20% United States Reimbursement Fee with Trade and Investment Deals that the various Gulf States will be making into the United States,” Trump said in a post on social media.
Meanwhile, Iran’s military reportedly said it would not allow the United States to “interfere” in the Strait of Hormuz and warned Gulf neighbours—many of which have borne the brunt of Iran’s retaliatory attacks—against cooperating with Washington.
Since the conflict erupted in late February, the Strait of Hormuz has emerged as the epicentre of the confrontation, with both the US and Iran seeking to assert control over the vital maritime route, which accounts for nearly 25% of global crude oil exports and is critical to Asian energy supplies.
MCX gold, silver recover part of recent losses
Tracking gains in the international market, the near-month MCX gold futures contract ₹3,000 per 10 grams”>jumped nearly ₹3,000 per 10 grams to hit an intraday high of ₹1,43,194. In the previous trading session, the precious metal had fallen by over ₹5,000, slipping to a three-month low.
The near-month MCX silver futures contract also rebounded, rising ₹7,710 per kg to touch an intraday high of ₹2,25,428, recovering part of its recent losses. Despite today’s rally, the white metal remained down ₹5,643 so far in July. It had ended June with a sharp decline of ₹38,435 per kg.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
