Gold and Silver Prices Decline Amid Strengthening US Dollar and Geopolitical Tensions
Gold and silver prices experienced a notable downturn on Thursday, driven by a firmer US dollar and escalating geopolitical conflicts in the Middle East. The ongoing US-Israel-Iran war and rising oil prices have heightened market volatility, impacting precious metals globally. As the dollar appreciates, bullion becomes more expensive for investors using other currencies, leading to fluctuations in both domestic and international markets.
Market Movements and ETF Performance
On the Multi Commodity Exchange (MCX), silver futures for May 2026 delivery fell by Rs 2,126, or 0.8%, to Rs 2,66,362 per kilogram. Gold futures for April 2026 also slipped, declining Rs 708, or 0.43%, to Rs 1,61,081 per 10 grams. In global markets, spot gold edged down 0.1% to $5,172.86 per ounce, while spot silver dropped 0.3% to $85.49 per ounce.
Silver exchange-traded funds (ETFs) saw significant declines, with Motilal Oswal Silver ETF leading the fall by nearly 4% to an intraday low of Rs 256.01. Other funds, including ICICI Prudential Silver ETF and Zerodha Silver ETF, fell around 3% each. This marks a reversal from previous months, with investors withdrawing approximately Rs 826 crore from silver ETFs in February 2026, the first net outflows in over two years.
Factors Driving Price Volatility
US Dollar Strength: The US dollar strengthened by about 0.1%, making dollar-priced bullion more costly for international buyers. Nicholas Frappell, global head of institutional markets at ABC Refinery, noted that while geopolitical violence typically supports gold, the strong dollar and interest rate environment are creating headwinds.
Geopolitical Tensions: Iran's warning of oil prices potentially surging to $200 a barrel after targeting merchant vessels has intensified concerns. Crude prices climbed above $100 per barrel, raising inflation fears and reducing expectations for early interest rate cuts in the United States.
Inflation and Interest Rates: Rising energy costs have heightened inflation concerns, with market participants awaiting the delayed Personal Consumption Expenditures (PCE) index release for further cues. This has contributed to the volatility in precious metals prices.
Expert Analysis and Investment Advice
Manoj Kumar Jain of Prithvi Finmart provided insights into support and resistance levels for gold and silver. He stated that silver is likely to maintain support near $74.00 per troy ounce, while gold could hold above $4,940 per troy ounce on a weekly closing basis. Key levels include:
- Gold Support: $5,145 to $5,100 per troy ounce; Resistance: $5,220 to $5,264
- Silver Support: $82.80 to $79.10 per troy ounce; Resistance: $88.00 to $90.40
- MCX Gold Support: Rs 1,59,800 to Rs 1,59,000; Resistance: Rs 1,62,700 to Rs 1,63,500
- MCX Silver Support: Rs 2,65,500 to Rs 2,61,600; Resistance: Rs 2,71,000 to Rs 2,75,000
Jain advised investors to wait for markets to stabilize before taking new positions, citing ongoing volatility due to dollar index movements, the US-Iran conflict, and crude oil price fluctuations.
Global and Domestic Implications
The International Energy Agency has called for a large-scale release of strategic oil reserves to mitigate potential oil shocks. Meanwhile, gold ETFs are reportedly gaining more traction compared to silver, reflecting shifting investor sentiments. As tensions persist, experts predict continued price swings in precious metals, with close monitoring of geopolitical developments and economic indicators recommended for market participants.
