Gold prices slipped in the international markets on Thursday, 28 May as a stronger US dollar and fresh US attack escalating on Iran rattled global commodity markets, raising fears that inflation could remain elevated for longer than expected.
Spot gold fell 0.8% to $4,419.60 per ounce as of 0129 GMT, while US gold futures for June delivery dropped 0.7% to $4,417.10. Silver prices also came under pressure, with spot silver declining 1.7% to $73.34 per ounce. Indian commodity markets remained shut on Thursday, May 27, on account of Bakrid.
Why gold and silver prices are falling
The biggest trigger behind the fall in bullion prices was the strengthening of the US dollar, which made dollar-priced commodities like gold more expensive for holders of other currencies.
The pressure intensified after fresh US military strikes in Iran targeted what officials described as a military site threatening American forces and commercial shipping activity near the Strait of Hormuz. The strikes came only hours after US President Donald Trump dismissed reports suggesting a possible agreement with Iran to restore smooth traffic movement through the strategically important waterway.
The escalation pushed crude oil prices nearly 2% higher in early Asian trade on Thursday, further fuelling concerns that energy-driven inflation could accelerate again.
Even though geopolitical conflicts typically boost safe-haven demand for gold, the current situation has created a more complicated environment for investors. Rising oil prices are increasing fears that inflation could remain stubbornly high, reducing expectations for aggressive interest rate cuts from central banks.
Federal Reserve Governor Lisa Cook added to those concerns on Wednesday when she said the US central bank should keep short-term interest rates steady for now. However, she also warned that tariffs, the Iran conflict, and a surge in artificial intelligence-related investments were increasing price pressures, and the Fed could consider raising rates if necessary.
Meanwhile, Hong Kong Futures Exchange announced on Wednesday that it would introduce market-wide trading fee discounts and incentive programmes for gold futures contracts in an effort to improve liquidity and revive market participation.
Outlook ahead: Key levels to watch
Market experts believe gold and silver could remain volatile in the near term as geopolitical tensions, inflation risks, and monetary policy uncertainty continue to dominate investor sentiment.
Renisha Chainani, Head of Research at Augmont, said, “Gold and silver are under pressure following US military strikes on southern Iran, which have effectively ended near-term hopes for a diplomatic resolution. Oil prices have risen sharply in response, reviving energy-driven inflation concerns across global markets.”
She added that the geopolitical escalation has created a conflicting setup for gold. While safe-haven demand would usually support the metal during periods of uncertainty, rising inflation risks are simultaneously strengthening the US dollar and pushing bond yields higher, limiting meaningful upside in gold prices.
According to Chainani, bond markets have already started repricing expectations for US interest rates. The probability of a 25 basis point Federal Reserve rate hike by December has now climbed to around 40%, while the chances of no rate cuts in 2026 have increased to nearly 60%.
She also pointed out that April Producer Price Index data, which showed annualised inflation at 6%, has strengthened the market’s hawkish reassessment of the Federal Reserve outlook.
Renisha Chainani said, “Gold is currently trading near the lower boundary of the $4,450–4,600 range. A sustained break below this level could trigger additional profit-booking, with $4,380 emerging as the next major downside target for bullion.”
On silver, she said prices are currently moving within a broad range of $72 to $78.50 per ounce, and momentum is likely to remain restricted until there is greater clarity on negotiations between the United States and Iran.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
