Gold prices remained steady near a one-week high on Thursday, as hopes of a diplomatic resolution between the United States and Iran tempered safe-haven demand. Investors remained cautious, awaiting further clarity on a potential peace agreement.
Gold Prices Steady in International Markets
In the spot market, gold was unchanged at $4,688.16 per ounce as of 0059 GMT, after climbing nearly 3% in the previous session to touch its highest level since April 27. US gold futures for June delivery edged up 0.1% to $4,696.60.
Domestic Gold and Silver Prices Rally
In the national capital, gold of 99.9% purity rose by Rs 2,900 to Rs 1,55,400 per 10 grams, inclusive of taxes, on Wednesday. Silver also extended its rally, advancing by Rs 3,500 to Rs 2,54,500 per kg, according to the All India Sarafa Association.
Factors Driving the Rally
Saumil Gandhi, Senior Analyst – Commodities at HDFC Securities, attributed the sharp recovery in gold to cooling geopolitical worries, which led to a reversal in macroeconomic factors that had previously weighed on precious metals. The decline in crude oil prices and the US dollar, driven by expectations of a diplomatic resolution, reduced inflation fears and strengthened the appeal of gold and silver.
Market Sentiment and Economic Data
Global markets reacted positively to reports that Washington and Tehran were moving closer to a deal, with equities rallying to record highs and the US dollar and oil prices declining. On the economic front, data showed private-sector hiring in the US rose more than expected in April, according to the ADP national employment report. Investors now await the monthly US jobs report due on Friday for fresh clues on the economy and potential Fed rate cuts.
Federal Reserve officials noted that the ongoing conflict could increase the risk of persistent inflation, particularly through elevated oil prices and supply chain disruptions.
Outlook for Gold and Silver
Analysts remain cautious about the upside for the near term, as elevated crude oil prices and fading hopes of a US Fed rate cut could cap gains. The trend in gold and silver prices is expected to be shaped by crude oil movements and the Fed's monetary policy stance.
The SPDR Gold Trust, the world's largest gold-backed ETF, reported a 0.2% decline in holdings to 942.50 metric tonnes on Tuesday. Among other precious metals, spot silver dipped 0.2% to $77.16 per ounce, platinum inched up 0.1% to $2,062.50, and palladium eased 0.3% to $1,533.25.
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