Precious metals witnessed renewed buying on Thursday, 4 June, supported by optimism after Israel and Lebanon agreed to a conditional ceasefire, reviving hopes for progress in negotiations aimed at resolving the Iran conflict and reopening the Strait of Hormuz.
Comex gold jumped $76.3 per troy ounce to reach the day’s high of $4,543, while silver futures rebounded $1.7 to $75.33. Despite the attempted recovery, both metals continued to trade lower for the week, with gold and silver down 1.88% and 2.30%, respectively.
The US-backed agreement between Israel and Lebanon has revived hopes for broader negotiations involving Iran. Earlier this week, the fragile ceasefire between Iran and the US came under pressure after both nations exchanged attacks, although leaders from both sides continued to express optimism that negotiations were still underway.
US President Donald Trump said on Wednesday that progress in negotiations with Iran could be achieved as early as this weekend. Iran also stated that talks with the US were continuing, although it acknowledged that no meaningful progress had been made so far.
As tensions eased, demand for the US dollar weakened, with the dollar index slipping to 99.2 against a basket of currencies in trade, snapping a three-session winning streak. The decline also supported a rebound in precious metals, as dollar-denominated bullion became cheaper for holders of other currencies.
Although crude oil prices are set to snap their three-day winning streak on Thursday, they continue to remain elevated, raising concerns that inflation could stay above the US Federal Reserve’s target for a prolonged period. This may force policymakers to maintain a tighter monetary policy stance.
Several US Federal Reserve officials have recently indicated that higher interest rates may be warranted if inflation remains above the target level. Cleveland Federal Reserve President Beth Hammack said the US central bank may need to raise rates further should already elevated inflationary pressures continue to intensify.
Recent US labour market data has also strengthened the case for a potential rate hike. Markets are currently pricing in a 42% probability of a 25-basis-point rate hike in December, according to CME Group’s FedWatch tool.
Investors are now awaiting the US nonfarm payrolls data for May, due on Friday, to gauge the Federal Reserve’s future monetary policy path. Analysts expect that a stronger-than-expected report could add further momentum to gold’s decline.
“Going forward, bullion faces competing forces. Progress toward a wider regional peace deal and easing energy prices could support gold and silver through lower yields and a softer dollar. However, persistent inflation risks and rising expectations of Federal Reserve tightening remain significant headwinds, keeping the outlook balanced but cautiously supportive,” said domestic brokerage firm Kotak Securities.
MCX gold and silver trade higher
Tracking gains in the international market, the near-month gold futures contract on MCX jumped ₹1,900 per 10 grams to hit the day’s high of ₹1,60,408, while silver futures also surged ₹4,842 per kilogram to ₹2,67,800.
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said, “Gold prices remained range-bound near ₹1,59,300, finding mild support from a 1.50% decline in crude oil prices. However, broader sentiment remains cautious as traders await key triggers from developments in West Asia, rupee movement, RBI policy outcomes, and tomorrow’s US non-farm payrolls and unemployment data.”
Technically, gold has immediate support near ₹1,58,500, while ₹1,60,500 remains the key resistance zone, Trivedi added.
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