Gold and silver pared Monday’s intraday gains on 27 April as the lack of clarity over the resumption of US-Iran peace talks pushed crude oil prices higher, intensifying inflationary concerns. Investors also refrained from taking fresh positions ahead of key central bank meetings scheduled this week.
COMEX gold futures dropped $59 per troy ounce to an intraday low of $4,681, while silver futures fell $1.82 to $74.59.
Crude oil prices continue to trade higher, with Brent crude futures hitting $108 a barrel, marking the highest level in three weeks after hopes for a second round of ceasefire negotiations between Washington and Tehran unravelled over the weekend.
While uncertainty lingers over a second round of peace talks, recent media reports suggest that Iran has submitted a new proposal to the US aimed at reopening the Strait of Hormuz and ending the war.
Tehran has reportedly signalled that it would accept an interim deal to reopen Hormuz in exchange for the US lifting its blockade of Iranian ports, according to a report by the Associated Press.
US President Donald Trump on Saturday scrapped plans to send US special envoy Steve Witkoff and Jared Kushner to Pakistan for ceasefire talks related to Iran, noting that the negotiations could instead happen over the phone.
With a fragile ceasefire in place, the US and Iran are locked in a standoff over the strait, through which a fifth of the world’s traded oil and gas passes in peacetime. The strait’s closure, meanwhile, has put pressure on Trump, as oil and gasoline prices have skyrocketed ahead of crucial midterm elections, and it has pressured his Gulf allies, which use the waterway to export their oil and gas.
The higher energy prices are fuelling inflation fears and raising concerns that interest rates could remain elevated for longer. While gold is seen as an inflation hedge, high interest rates reduce the appeal of the non-yielding asset.
Meanwhile, major central banks in Japan, the US, Europe and Britain are widely expected to keep interest rates unchanged at their policy meetings this week.
The Bank of Japan will be first in line on Tuesday, with markets pricing in no change in its short-term policy rate of 0.75%. The Federal Reserve, at what is likely to be Jerome Powell’s final meeting as chair, is also seen maintaining status quo.
Similarly, the European Central Bank and the Bank of England are unlikely to alter rates, though their tone and outlook could challenge market expectations of two 25-basis-point hikes later this year.
Even as rates are seen remaining unchanged, investors will closely watch for any signs from policymakers — including Jerome Powell and ECB President Christine Lagarde — that they are growing concerned about the inflation threat posed by the unprecedented oil supply disruption stemming from the US-Iran conflict.
MCX gold eases over ₹1,400; silver fell back to ₹2.40 lakh
In the domestic market, the near-month gold futures contract on MCX slipped ₹1,460 per 10 grams to hit the day’s low of ₹1,51,239.
The silver futures contract fell even more sharply, declining by ₹4,385 per kilogram to ₹2,40,251. Silver was last seen around this level about two weeks ago. Both gold and silver closed last week lower with losses of up to 1.5%, ending their three-week winning run.
(With inputs from Reuters)
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