Gold and silver prices remained relatively stable on the Multi Commodity Exchange on Monday, even as renewed tensions in the Middle East heightened concerns regarding the precarious nature of the Iran-US ceasefire. Meanwhile, expectations of additional interest rate increases by the US Federal Reserve persisted in exerting pressure on the non-yielding precious metals. Gold futures with August expiry on MCX declined by Rs 617 per 10 grams, representing a decrease of 0.4%, settling at Rs 1,43,545 per 10 grams. The futures contracts with October and December expiries, meanwhile, experienced a decline of up to 0.4%. Silver futures with September expiry declined by Rs 518 per kg, settling at Rs 2,22,954. Meanwhile, contracts with July and December expiries experienced a decrease of up to 0.3%. In the international market, spot gold experienced a decline of 0.7%, settling at $4,061.35 per ounce. US gold futures for August delivery declined by 0.5%, settling at $4,076.40. The metal was on track for a fourth consecutive monthly loss of 10.4%. Spot silver declined by more than 1% to $58.51 per ounce, whereas platinum experienced an increase of 1% to $1,630.13, and palladium saw a rise of 0.8% to $1,218.92.
The decline in precious metals coincides with a slight increase in oil prices, following the recent tit-for-tat strikes between the US and Iran over the weekend, which represent the most significant escalation since the interim peace agreement was reached between the two nations. US President Donald Trump stated on Saturday that Iran would “no longer exist” if the US were “forced” to resume the war. “United States aircraft just struck Iranian missile and drone storage locations, and coastal radar sites, for violating the Cease Fire Agreement, AGAIN!” Trump wrote on Truth Social. On Sunday, US Central Command announced that it had conducted strikes on 10 Iranian military targets in response to ongoing Iranian aggression towards commercial shipping. Iran announced that it had executed retaliatory strikes against US bases located in Kuwait and Bahrain. “Any attempt to adopt new or separate arrangements compared to what is underway by the Islamic Republic of Iran, will only lead to more complicated situations and delays in the reopening of the Strait of Hormuz, and will increase the tensions,” Iranian Foreign Minister Abbas Araghchi said. “I urge all parties… to adhere to the memorandum of understanding and not to allow this MoU to deviate from its course,” he further said.
Iran’s Revolutionary Guards announced that they are implementing measures to regulate traffic in the vital waterway, asserting that vessels that violate these measures will face stricter enforcement than previously experienced. Israel has initiated strikes in Lebanon, following Hezbollah’s leader Naim Qassem’s rejection of a proposed deal to resolve the ongoing conflict. Traders currently anticipate three rate hikes from the Federal Reserve this year and are assigning an approximately 80% probability to an increase in December, as indicated by the CME FedWatch Tool. Market participants are now poised to scrutinise the forthcoming ADP employment data for June and the US nonfarm payrolls data, both scheduled for release later this week, in order to better assess the Federal Reserve’s monetary policy orientation.
Jateen Trivedi emphasised that attention now turns to US Non-Farm Payrolls and unemployment data, anticipated to offer new guidance for gold and the dollar. “Volatility is likely to remain elevated until the release of these key economic indicators,” he stated. “U.S. and Iran were at it again over the weekend, with fresh military strikes reported from both parties, which casts further doubt over how long oil can stay at these subdued levels and therefore over the broader inflation and interest rate outlook,” as reported Tim Waterer. “Gold could see the $5,000 level again this year, but this would be based on further de-escalation, oil having a sustained move to pre-war levels to dull the inflationary impact of the conflict, and a softer dollar,” he added.