Precious metals edged lower in Wednesday’s trade on 11 March from a strong close in the previous session as the US dollar resumed gains, making greenback-priced commodities more expensive for other currency holders.
The April futures contract on COMEX Gold dropped $87 to the day’s low of $5,155.9 per troy ounce, erasing half of the previous session’s gains. The May silver contract on COMEX Silver also fell, dropping $5 per troy ounce to reach the day’s low of $84.55 earlier in the session.
The US dollar index regained strength today, climbing to 99.42 as the conflict with Iran showed no signs of easing and energy prices continued to rise. On the data front, February inflation came in line with forecasts, showing stable but above-target CPI.
However, concerns have mounted that higher energy prices will fuel inflation in March, as Brent crude prices have surged 26% in March so far.
The US central bank is scheduled to meet later in March, where policymakers are widely expected to hold rates steady, with traders anticipating only one 25-basis-point cut, possibly in September.
Recent labour market data has rattled investors, with the economy unexpectedly shedding jobs in February and the unemployment rate rising.
In theory, a weak jobs report would help build a case for the Federal Reserve to cut interest rates. However, hopes for rate cuts have been complicated by surging oil prices amid escalating tensions in the Middle East.
Gold is often viewed as a long-term inflation hedge, but it typically performs well in low-interest-rate environments because it yields no income.
Middle East tensions remain elevated as attacks continue
Missile strikes across the Middle East were visible for the 12th day on Wednesday, as leaders continued to carry out attacks, showing little interest in de-escalation, which has already disrupted energy flows and kept global inflation fears alive.
In a further escalation, Iranian attacks against commercial ships reportedly set a Thai cargo ship ablaze in the Strait of Hormuz, while drones targeted Dubai International Airport, intensifying a campaign that is squeezing the oil-rich region as global energy concerns mount.
Meanwhile, Iran’s joint military command announced it would begin targeting banks and financial institutions in the Middle East, indicating that the conflict in the region could intensify further.
The US campaign of airstrikes continued on Tehran, while the Israeli military is striking across Iran as well as in Lebanon, where Israel says it is targeting Hezbollah, which is backed by Iran.
MCX gold drops over ₹2,100; silver falls ₹12,752 per kg
In the domestic market, the gold futures contract on the Multi Commodity Exchange of India fell ₹2,073 per 10 grams to reach the day’s low of ₹1,61,230 per 10 grams.
The yellow metal finished last week down 0.30%, marking its first weekly decline in four weeks. So far this month, prices have fallen marginally ₹54 per 10 grams.
Silver futures also declined, falling ₹12,752 per kilogram to reach ₹2,65,098. Amid sharp volatility last week, prices closed 5% lower, ending a two-week winning run.
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