Gold and Silver Prices Decline Amid Crude Oil Rally and Inflation Concerns

Gold and Silver Prices Plunge Amid Rising Oil Prices and Stalled US-Iran Negotiations

On Tuesday, 28 April, gold and silver prices suffered a sharp decline, erasing their recent gains, as concerns over inflation intensified due to rising crude oil prices and stalled US-Iran negotiations. The markets remained cautious ahead of the US Federal Reserve meeting, which is expected to keep interest rates unchanged.

Gold futures on the COMEX dropped $125 per troy ounce to an intraday low of $4,681, marking the lowest level in a month. This decline has turned the yellow metal's month-to-date returns negative by 1.92%, and from the monthly high of $4,917, it has corrected 6.8%. Silver futures fell $3.1 to $71.92, the lowest level since 7 April. Over the last seven trading sessions, the white metal has declined 14% from its high of $83.24.

The hopes for a second round of peace talks between the US and Iran, which could potentially end the two-month-long conflict in the Middle East, are fading as both nations have failed to agree on terms. The US is reportedly reviewing Tehran's latest proposal to resolve the conflict, but a US official said President Donald Trump was dissatisfied with the plan as it did not address Iran's nuclear programme.

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This development has dimmed hopes for a swift resolution to energy supply disruptions, which have been fuelling inflationary pressures and, in turn, raising the likelihood of higher interest rates. Bullion is traditionally viewed as an inflation hedge; however, higher interest rates reduce its appeal as a non-yielding asset.

The US Federal Reserve is expected to keep interest rates unchanged at what could be Jerome Powell's final meeting as chair. Investors are closely watching for clues on future policy direction. The Bank of Japan kept its short-term policy rate steady at 0.75% on Tuesday, while the European Central Bank and the Bank of England are expected to maintain the status quo.

In India, the MCX gold futures contract fell ₹3,040, breaking below the ₹1.50 lakh mark for the first time since 7 April and dropping to ₹1,48,681 per 10 grams. The silver futures contract on MCX crashed ₹9,619 per kilogram to the day's low of ₹2,32,205. The fall has dragged the metal down by ₹26,193 from its monthly high of ₹2,61,750.

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