Precious metals were trading with sharp losses in Monday’s session on 13 April, as tensions in the Middle East resurfaced after a brief pause following the collapse of peace talks between the US and Iran over the weekend, which fuelled inflation concerns and clouded the outlook for future interest rate cuts.
Comex April gold futures crashed $161 per troy ounce to the day’s low of $4,626, erasing most of their recent gains and putting them on track for a second consecutive loss. May silver futures on Comex also reversed recent gains, falling $4 per troy ounce to touch the day’s low of $72.54 earlier in the session.
Investors had hoped that the US and Iran could draft a peace deal to end the over-month-long conflict in West Asia, but both countries failed to reach a consensus.
US President Donald Trump said direct talks with Iran in Pakistan failed because Iran was “unwilling to give up its nuclear ambitions”, while an Iranian foreign ministry spokesperson reportedly blamed the US for excessive demands and unlawful requests.
Additionally, the failure of the peace talks has spurred a surge in crude oil prices, which has likely renewed inflationary pressures and heightened concerns over potential central bank rate hikes that could diminish the appeal of non-interest-bearing precious metals.
As talks ended without any agreement, US President Trump warned that the US would start “blockading any ships trying to enter or leave the Strait of Hormuz”. “I have also instructed our Navy to seek and interdict every vessel in international waters that has paid a toll to Iran. No one who pays an illegal toll will have safe passage on the high seas,” he wrote on social media.
The metals, which had shown signs of a rebound amid hopes of easing tensions, are likely to witness volatility going ahead as Iranian officials have also threatened retaliation, indicating that tensions in the region could escalate again.
The US Central Command (Centcom) later said its forces would begin implementing the blockade at 10:00 EDT (14:00 GMT) on Monday. The renewed tensions also boosted the US dollar index, which gained over 2% against a basket of currencies, making dollar-denominated precious metals more expensive for holders of non-dollar currencies.
Precious metals are caught between geopolitical tensions and fears of monetary tightening, as major central banks have already sounded caution over the impact of a potential closure of the Strait of Hormuz on consumer prices, which also clearly reflected in inflation data.
US inflation has climbed to 3.3%, the highest since May 2024, with the monthly index rising 0.9%, the steepest increase since mid-2022. Traders are now pricing in a 30% chance of at least a 25-basis-point rate cut in December, according to CME Group’s FedWatch tool, a Reuters report showed.
MCX gold drops over ₹1,500; silver sinks to ₹2.36 lakh per kilo
In the domestic market, near-month MCX gold futures dropped ₹1,397 to hit the day’s low of ₹1,51,255 earlier in the day. The yellow metal closed last week with a 2% gain, extending its winning run to a second week, but it still trades below its March highs.
Silver futures on MCX also fell by nearly ₹6,900 per kilogram, reaching ₹2,36,452. Like gold, the white metal also finished the last two weeks on a higher note but still remains below its March high of ₹2.62 lakh.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
