Gold and Silver Prices Decline: Key Indicators Point to Potential Rebound in the Coming Week

Global Market Trends Fuel Decline in Gold and Silver Prices in India

The gold and silver prices in India traded lower on Friday, tracking the weakness in global bullion markets. The decline was attributed to a stronger US dollar and elevated crude oil prices, which fueled expectations of higher interest rates by the US Federal Reserve.

The MCX gold rate today for June futures declined by ₹501, or 0.31%, to ₹1,59,105 per 10 grams. The MCX silver price for July futures fell by ₹2,320, or 0.84%, to ₹2,72,563 per kg. This week so far, the MCX gold price has risen 0.23%, while the MCX silver price has remained flat.

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The international market saw gold prices edge lower as the US dollar hovered near a six-week high, making dollar-denominated bullion more expensive for holders of other currencies. The yellow metal has declined around 0.4% so far this week. Spot gold price slipped 0.5% to $4,519.72 per ounce, while US gold futures for June delivery eased 0.5% to $4,520.30 per ounce. Spot silver price dropped 1.1% to $75.82 per ounce.

The rise in crude oil prices is attributed to investors remaining skeptical about the prospects of a breakthrough in US-Iran peace talks. Higher crude oil prices tend to elevate inflation risks, strengthening expectations that interest rates could remain elevated for longer. Markets are currently pricing in a US Fed rate hike before the end of the year, with a 60% probability of a move by December, according to CME Group's FedWatch tool.

Although gold is traditionally viewed as a hedge against inflation, a higher interest rate environment generally weighs on the non-yielding precious metal. The MCX gold prices remained range-bound between ₹1,57,500 and ₹1,60,400 this week, while continuing to hold above key daily moving averages.

Read also: Gold and Silver Prices in India: A Review of Current Rates Across Major Cities

According to Kaveri More, Commodity Technical Analyst at Choice Broking, traders should closely monitor a sustained breakout beyond the current trading range, as it could determine the next directional move in gold prices. In the domestic market, the MCX silver prices have maintained strength above the 20-DEMA level of ₹2,67,684. The metal has also rebounded from an important 50% retracement zone, indicating renewed buying interest at lower levels.

More noted that uncertainty surrounding uranium trade discussions, disputes over control of the Strait of Hormuz, and the US rejection of certain geopolitical proposals continued to support safe-haven sentiment across precious metals markets.