Silver rate slipped marginally on MCX on Friday as surging crude oil prices amid prolonged US-Iran war have reduced expectations for near-term U.S. interest rate cuts. Losses were capped on the back of a softer dollar.
MCX silver price declined 0.7% to ₹2,66,001 per kg while MCX gold price was down 0.3% at ₹1,59,764 per 10 grams.
However, in the international market, Spot silver rose 1.4% to $84.96 per ounce. Meanwhile, Spot gold gained 0.8% to $5,118.75 per ounce as of 0234 GMT, while U.S. gold futures for April delivery remained unchanged at $5,123.30.
Among other precious metals, Spot platinum advanced 0.9% to $2,151.97 and palladium climbed 1.4% to $1,640.64.
Despite the uptick, bullion has declined roughly 1% so far this week. Concerns over inflation and uncertainty around the Federal Reserve’s ability to cut rates if oil prices remain elevated are partially offsetting safe-haven appeal in gold and silver.
Why gold, silver rose on Friday?
The main reason was a weaker dollar. The dollar slipped slightly on Friday, making dollar-denominated commodities such as bullion more affordable for holders of other currencies. Meanwhile, U.S. 10-year Treasury yields eased, improving the attractiveness of non-yielding assets like gold.
Moroever, adding to geopolitical tensions, Iran’s Supreme Leader Mojtaba Khamenei said on Thursday that Tehran would keep the strategic Strait of Hormuz closed as leverage against the United States and Israel. The move has heightened concerns over global energy supply and risk assets.
It also ledd to crude oil prices surging above $100 per barrel again, fueling inflation worries, after attacks on oil tankers in the Gulf and warnings from Iran dampened hopes of a quick de-escalation in the Middle East conflict.
As oil prices rallied, U.S. President Donald Trump once again urged Federal Reserve Chair Jerome Powell to cut interest rates. Traders currently expect the Fed to keep interest rates unchanged in the 3.5%-3.75% range at the conclusion of its two-day meeting on March 18, according to CME Group’s FedWatch tool.
While recent inflation data indicate that price growth remains under control, the war involving Iran and the resulting spike in crude prices have yet to be reflected in the economic data.
