Gold and silver prices are expected to remain volatile in both domestic and international markets as the US-Iran conflict intensifies and India imposes fresh restrictions on silver and gold imports. Markets are reacting to the government's curbs on silver imports, fluctuations in crude oil prices, and ongoing uncertainty linked to the US-Iran conflict. Investors are also monitoring a series of global economic indicators, including Chinese macroeconomic data, US housing statistics, PMI readings, weekly unemployment claims, and the minutes of the FOMC meeting.
Gold Prices Under Pressure
Bullion prices remained under pressure as geopolitical tensions escalated following a drone attack that triggered a fire at a nuclear facility in the United Arab Emirates, pushing crude oil prices upward and increasing expectations of tighter monetary policy. Saudi Arabia announced it had intercepted three drones, while US President Donald Trump said Iran needed to act quickly after attempts to end the US-Israel conflict appeared to lose momentum. Gold, which does not offer interest income, generally loses appeal during periods when central banks raise interest rates to combat inflation.
Silver Rate Outlook This Week
Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities, noted that gold maintained a firm upward bias last week, climbing almost 4% on MCX and finishing near Rs 1,58,000. He attributed the rally to the recent 6% increase in import duty, which pushed domestic prices sharply higher despite weakness in overseas markets. Trivedi said the latest restrictions on silver imports do not amount to a complete ban but indicate tighter control over the entry process. Imports will now largely move through approved channels such as RBI-authorised banks, DGFT-recognised entities, and jewellers operating through bullion exchanges. He added that the back-to-back policy measures introduced within a short span appear aimed at managing foreign exchange outflows. Restricting silver imports could help curb immediate dollar demand and ease pressure on India's reserves. As a result, domestic consumers may face higher silver prices and wider premiums, though the broader objective remains protection of the country's external account position.
Factors Driving Gold Prices
Pranav Mer, Vice President, EBG - Commodity & Currency Research at JM Financial Services Ltd, said gold prices paused after recent gains and ended last week lower due to a sharp rise in the US dollar and global bond yields. He attributed this to stronger-than-expected April inflation readings from regions including India, China, and the US, which strengthened expectations that interest rate cuts may be delayed. Mer added that bullion prices also came under pressure after India increased import duties and introduced stricter measures to reduce precious metal imports amid concerns over the current account deficit and foreign exchange outflows. At the same time, crude oil prices continued to rise, gaining nearly 8-10% during the week while remaining above $100 per barrel. According to Mer, uncertainty over a potential US-Iran peace agreement, along with continuing ceasefire concerns and the Strait of Hormuz blockade, kept energy markets elevated.
Gold Drops to Lowest Level in 1.5 Months
Gold prices dropped to their weakest level in over six weeks on Monday as escalating tensions in the Middle East drove crude oil prices higher, intensifying inflation concerns and strengthening expectations that interest rates could stay elevated for a longer period. Spot gold declined 1.1% to $4,488.99 per ounce by 0052 GMT, touching its lowest level since March 30. US gold futures for June delivery slipped 1.5% to $4,493.30.
Gold Round-Up from Last Week
During the previous week, gold futures on the Multi Commodity Exchange (MCX) advanced by Rs 6,017, or 3.94%, ending at Rs 1.58 lakh per 10 grams. Silver futures also posted gains, rising Rs 9,964, or 3.8%, to settle at Rs 2.71 lakh per kilogram. Prime Minister Narendra Modi called on people to reduce unnecessary gold buying over the next one year to save foreign exchange reserves for more important import items such as crude oil. Recent steps to raise import duties of gold and silver from 6% to 15% and fresh restrictions on gold and silver imports are steps in that direction. Analysts said movements in the rupee will continue to play a significant role in determining domestic bullion prices, while changes in crude oil rates and broader global economic developments are likely to influence market direction. Traders will also keep an eye on developments at the US Federal Reserve, where Kevin Warsh is set to officially succeed Jerome Powell after the completion of Powell's eight-year tenure.
