Gold and Silver Prices See Gains Amid Hopes for US-Iran Peace Accord and Weakening US Dollar

Precious Metals Rally on Optimism of US-Iran Negotiations

On Thursday, 16 April, precious metals traded higher as optimism grew that the US and Iran could engage in a second round of negotiations to end the month-long conflict in West Asia. The softer US dollar also supported precious metals, making them more affordable for holders of other currencies.

The Comex gold futures rallied by $38 per troy ounce to an intraday high of $4,861, while silver futures surged $1.64 to the day's high of $81. The US dollar hovered near its lowest level in six weeks, making greenback-denominated commodities, including bullion, more attractive to investors.

Gold and Silver Prices Recover from March Lows

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

Gold and silver prices had fallen 10% and 20%, respectively, in March amid concerns that elevated energy prices could fuel inflation and keep global interest rates higher. However, those worries have eased somewhat amid growing hopes of resumed negotiations after the first round collapsed over the weekend. This has also pushed crude oil prices lower, easing concerns over energy-led inflation and improving the outlook for US Federal Reserve rate cuts.

Market Outlook Improves with Potential for Rate Cuts

Bullion, which does not yield interest, tends to perform better in a low-interest-rate environment. The US has signalled the possibility of further talks with Iran, although no decision has yet been made on whether to resume negotiations. US President Donald Trump earlier indicated that Washington could still reach a deal with Tehran.

Extension of Ceasefire and Blockade Considered

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

Reports suggest that Washington and Tehran are considering extending their two-week ceasefire to allow more time for talks, even as the Strait of Hormuz remains effectively closed under a dual blockade. Trump also said that leaders from Israel and Lebanon would speak on Thursday about halting the fighting between Israel and the Iran-backed militant group Hezbollah in Lebanon. Leaders from both sides have not met directly in more than 30 years, according to AP.

Domestic Market Sees Strong Recovery

In the domestic market, the near-month gold futures contract on MCX gained ₹1,042, reaching a day's high of ₹1,54,990 per 10 grams. The yellow metal has ended the last three weeks higher, helping it recover ₹25,203 from its March lows. Despite the strong recovery, the metal is still ₹25,789 below its record high of ₹1,80,779, attained in late January.

Silver contracts were also gained marginally by ₹3,993 per kilogram to ₹2,55,735. Earlier this week, the white metal reached nearly a one-month high, supported by a ₹12,000 jump in Tuesday's session. It was also the biggest intraday jump since early February. The rally has helped the white metal recover ₹56,092 from its March lows, yet the highly volatile metal is still down by ₹1,64,313 from its record peak of ₹4,20,048.