Summary:
Gold prices witnessed a sharp decline on June 11, with MCX gold falling nearly ₹2,000 per 10 grams. Rising tensions between the US and Iran pushed crude oil prices higher, triggering inflation concerns and strengthening expectations of prolonged high interest rates in the US. A stronger dollar and higher bond yield outlook added pressure on precious metals despite ongoing geopolitical uncertainty.
The prices of gold and silver were further down on June 11 due to the market reaction to the recent development in the ongoing tension between the USA and Iran. As inflation concerns have emerged in the wake of increased crude oil prices after new attacks by the US forces against Iran, investors have changed their perceptions regarding the interest rate and the performance of precious metals.
Nearly ₹2,000 Drop in MCX Gold Price
At the MCX market, gold futures opened with a steep fall gap and traded at ₹146,518 per 10 grams in the opening price before declining further to ₹146,444 in the day’s lowest price position, which marked a near ₹2,000 loss in gold prices per 10 grams. At the international market, COMEX gold fell below the $4,100 mark and traded at $4,046 per ounce.
Conflict Between USA and Iran Raises Inflation Concerns
According to the analysis of the commodity markets, the US military attack on Iran has added to the existing geopolitical uncertainties in the Middle Eastern region. Although gold is considered a safe-haven metal when there is geopolitical risk in the market, rising crude oil prices have made investors worried about inflation issues in the USA.
Inflation Numbers Boost Fed Rate Increase Chances
Inflation numbers published on Wednesday indicated that inflation in the US grew to 4.2% in May, hitting its highest level in three years due to rising energy prices. Higher inflation figures boosted expectations that the Fed would continue keeping interest rates high for an extended period and may raise interest rates once again in the coming months if needed.
Raising interest rates reduces the attractiveness of assets that offer no yields, like gold, while helping support the US dollar. The US Dollar Index was trading close to its two-month high, putting additional downward pressure on bullion prices.
Gold Rallies off Six-Month Lows, Silver and Platinum Rally
In the wider precious metals space, gold prices were seen rallying slightly following their hit to a six-month low of $4,023.96 an ounce and were last up 0.9% at $4,107.57 an ounce. In contrast, US gold futures were under pressure, sliding 0.2% to $4,124.92 an ounce. Spot silver prices rallied 1.6% to trade at $64.42 an ounce, whereas platinum prices climbed 1.1% to settle at $1,685.60 an ounce.
Issues Surrounding the Strait of Hormuz Increase Tensions on the Markets
On the other hand, the recent stoppage of vessels by the Iranian authorities through the Strait of Hormuz is expected to fuel tensions regarding any disruptions in the global flow of energy supplies, thus contributing to crude oil price appreciation and higher inflation expectations.
Prices for Gold and Silver in Leading Indian Cities
The domestic precious metal market saw prices of 24-carat gold standing at ₹1,47,860 for each 10 grams in Mumbai, ₹1,47,610 in New Delhi, ₹1,47,980 in Bangalore, ₹1,47,670 in Kolkata, ₹1,48,290 in Chennai, ₹1,48,100 in Hyderabad and ₹1,48,060 in Ahmedabad. As for silver, it is available in 999 Fine form for ₹2,36,390 to ₹2,37,480 per kg.
US Producer Prices Due for Release
Investor attention now shifts to the upcoming release of US Producer Price Index data.
