Gold and Silver Prices Surge to Two-Month High on Comex

Precious Metals Rise Amid Tightening Physical Market Conditions

On Wednesday, 13 May, precious metals traded higher, with gold recording modest gains and silver continuing its upward surge. The sustained investor interest and tightening physical market conditions supported the rally. COMEX gold futures jumped $49 per troy ounce to an intraday high of $4,734, while silver futures surged $4.30 to $89.88, hitting their highest level in two months.

Over the last eight trading sessions, the white metal has rallied 22.3%. The modest gain in the yellow metal is largely stemmed from higher-than-expected US inflation data for April, which increased expectations of a potential 25-basis-point Federal Reserve rate hike by December. However, the yellow metal remained relatively resilient, supported by continued central bank buying and safe-haven demand.

The interest-rate swaps market is now pricing in roughly a one-in-three chance of a Fed rate hike by year-end, up sharply from near-zero expectations at the end of last month. Higher interest rates are generally negative for gold, as the metal does not offer any yield, according to Bloomberg.

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Traders in the interest-rate swaps market are now pricing in roughly a one-in-three chance of a Fed rate hike by year-end, up sharply from near-zero expectations at the end of last month. However, gold continues to display resilience despite elevated rate expectations, mainly due to sustained central bank accumulation and geopolitical uncertainty supporting safe-haven demand.

On the downside, the brokerage said India's sharp increase in import tariffs on gold and silver may temporarily weigh on physical demand. Overall, the broader fundamental outlook for both gold and silver remains cautiously bullish, supported by geopolitical risks, persistent inflation uncertainty, and continued central bank buying.

In the energy market, oil prices eased modestly after surging for three consecutive sessions, as diplomatic efforts to resolve the US-Iran conflict failed to produce meaningful progress, keeping inflation risks elevated. US President Donald Trump's visit to China will be closely watched for any developments regarding the fragile trade truce and the Iran conflict.

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In the domestic market, the near-month gold futures contract on MCX surged ₹11,055 per 10 grams to touch ₹1,64,497, marking the highest level since 12 March. Meanwhile, silver futures on MCX jumped ₹25,000 per kilogram to reclaim the ₹3 lakh mark, touching ₹3,04,177, the highest level in over three months.

The sharp rally in domestic precious metals followed the Indian government's decision to raise import tariffs on gold and silver to 15% from 6%. The move is part of broader efforts to curb overseas purchases of precious metals and ease pressure on the country's foreign exchange reserves. While the higher duties are expected to weigh on domestic demand, economists believe the measures could help narrow India's trade deficit and support the rupee, which remains one of Asia's weakest-performing currencies.