Gold and silver prices extended their gains for the second consecutive session on Wednesday, 5 August, as optimism over a potential diplomatic breakthrough between the US and Iran eased concerns over inflation and reduced expectations of higher interest rates from the US Federal Reserve.
The precious metals also drew support from a weaker US dollar. Comex gold surged another $173 per troy ounce to $4,325, its highest level since mid-June. Comex silver futures extended Tuesday’s rally, climbing another $2.74 to $63 per troy ounce.
Middle East talks boost sentiment
Signs of easing tensions in the Middle East supported investor sentiment as reports indicated that negotiations between Iran and Oman over the reopening of the Strait of Hormuz were progressing smoothly.
Iranian Foreign Ministry spokesperson Esmail Baqaei said discussions were advancing positively at both the technical and political levels, adding that the talks were focused on establishing safe shipping routes while safeguarding the sovereign rights and security interests of both Iran and Oman, according to Iran’s Fars News Agency.
Baqaei added that Tehran was working closely with Muscat to develop the necessary framework for future shipping arrangements through the strategically important waterway.
The optimism was further reinforced after US President Donald Trump said late Tuesday that an agreement to reopen the Strait of Hormuz could be reached as early as Wednesday, as Iran and Oman moved closer to a deal.
Reports of renewed US-Iran diplomatic efforts also boosted hopes that the five-month conflict could move toward de-escalation, pushing crude oil prices lower and lifting global equity markets.
However, this is not the first time hopes of de-escalation have emerged. Similar optimism has surfaced several times since the conflict began in late February, only for tensions to escalate again.
Weak dollar lends further support
The US dollar index slipped below 99.8 on Wednesday, its lowest level in seven weeks, extending last week’s sharp decline amid intervention in the yen and foreign selling of long-term dollar-denominated fixed-income assets.
A weaker dollar typically boosts demand for dollar-denominated commodities by making them cheaper for holders of other currencies.
Although gold and silver are traditionally viewed as safe-haven assets during periods of geopolitical uncertainty, the earlier surge in crude oil prices had raised concerns over persistent inflation and the possibility of higher interest rates by global central banks.
Higher interest rates generally reduce the appeal of non-yielding assets such as gold and silver by increasing the opportunity cost of holding them.
Meanwhile, demand from central banks also remained subdued during the first half of 2026, falling to its lowest level since 2022, according to the World Gold Council. After heavy gold purchases over the past few years, central banks slowed their buying, contributing to gold surrendering part of its gains made in 2025.
MCX gold nears ₹1.50 lakh; silver up over ₹7,000
Tracking the solid gains in the international market, the near-month futures contract on ₹5,000 per 10 gram”>MCX gained nearly ₹5,000 per 10 grams to ₹148,889, putting it on track for its best intraday surge in nearly three months.
The silver futures moved up ₹7,285 per kilogram to ₹228,900, extending its winning run to a second day after surging ₹4,869, taking the two-day cumulative gain to ₹12,000.
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