Gold and Silver Prices Plunge Amid Inflation and Strengthening US Dollar

Precious Metals Under Pressure Amid Rising Crude Oil Prices and Strong US Dollar

Precious metals came under renewed pressure on Tuesday, 19 May, as elevated crude oil prices kept bond yields near multi-year highs, reducing the appeal of safe-haven assets. A stronger US dollar also weighed on bullion prices. Gold and silver oscillated between gains and losses but remained largely tilted to the downside.

Comex Gold Falls to $4,467

Comex gold fell by $91 per troy ounce to an intraday low of $4,467, while silver futures declined more sharply by $4.1 per ounce to $73.34, extending losses for a fourth straight session. Bullion prices have remained under pressure as elevated energy prices continue to fuel global inflation concerns, strengthening expectations that major central banks may keep interest rates higher for longer.

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

US Inflation Data and Interest Rates

Stronger-than-expected US inflation data has further reduced expectations of Federal Reserve rate cuts this year, while speculation over an additional rate hike before year-end has also intensified. Fears of higher borrowing costs pushed US bond yields to multi-year highs last week, and they continue to hover near those levels. Higher borrowing costs reduce the appeal of non-yielding bullion assets. Meanwhile, a gauge of the US dollar rose 0.24% to 99, making precious metals more expensive for overseas buyers.

Global Tensions and Market Sentiment

US President Donald Trump said on Monday that he had authorised a new wave of attacks against Iran this week but was holding off after leaders of Qatar, Saudi Arabia, and the United Arab Emirates sought more time to pursue diplomatic efforts. Domestic brokerage firm Kotak Securities said market sentiment remained fragile after Trump signalled possible progress toward a peace agreement with Iran, though markets largely doubted that a near-term resolution to the West Asia conflict was achievable.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Iran Conflict and Economic Data

The Iran conflict has now stretched beyond 80 days, while disruptions in the Strait of Hormuz continue with no clear path toward resolution. Last week's two-day summit between Trump and Chinese President Xi Jinping ended without concrete progress toward reopening the strategic shipping route. Going forward, Kotak said market focus will remain on the upcoming FOMC minutes and flash US PMI data. Any signs of persistent inflation, strong economic activity, or hawkish Fed commentary could cap gains in bullion, while renewed geopolitical tensions or weaker economic data may revive safe-haven buying.

Indian Bullion Market

MCX gold and silver remain weak. Tracking international prices, near-month gold futures on MCX fell by ₹1,000 per 10 grams to an intraday low of ₹1,58,420, remaining below the ₹1.60 lakh mark for the third straight session. Last week, the yellow metal had closed with a strong gain of 4%. Silver futures on MCX dropped by ₹10,722 per kilogram to an intraday low of ₹2,65,929. From its recent high of ₹3,04,891, the white metal has corrected by ₹38,962 based on today's low.

Comparison of Comex Gold and Silver Prices