Gold and Silver Prices Fall Amid Rising Oil Prices and Inflation Concerns

Precious Metals Prices Decline Amid Escalating Tensions in the Middle East

On Tuesday, May 12, gold and silver erased their recent gains as renewed tensions in the Middle East kept crude oil prices elevated. The escalating conflict weighed on precious metals, pushing prices lower. COMEX gold futures dropped $67 per troy ounce, reaching an intraday low of $4,660, while silver futures declined $2.13 to hit an intraday low of $83.67.

The tensions in the Middle East are expected to escalate further after US President Donald Trump said the month-old ceasefire with Iran was "on life support." Trump rejected Iran's response to the US peace proposal, raising concerns that the conflict could drag on and continue disrupting shipping through the Strait of Hormuz. Iran has reportedly released a proposal to end the war on all fronts, which included demands for compensation for war damages and emphasized Iranian sovereignty over the Strait of Hormuz.

The conflict has pushed Brent crude prices nearly 50% higher from pre-war levels of around $70 per barrel, adding to inflationary pressures across the global economy. The annual inflation rate in the US accelerated to 3.8% in April 2026, the highest level since May 2023, compared to 3.3% in March. The higher inflation print has complicated the Federal Reserve's policy path, increasing expectations of a potential 25 basis point rate hike by December.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The higher inflation print also pushed the US Dollar Index to 98, making dollar-priced commodities more expensive for holders of other currencies. Meanwhile, the unemployment rate in the US remained steady at 4.3%, pointing to continued resilience in the labor market.

In the domestic market, the near-term gold futures contract on Multi Commodity Exchange of India slipped marginally by ₹647 per 10 grams to the day's low of ₹1,53,016, while the silver futures contract fell ₹5,185 per kilogram to an intraday low of ₹2,73,126. The white metal has remained elevated over the last five trading sessions, gaining a cumulative ₹34,416. In Monday's session, silver touched its highest level since March 11.