Gold Price Drops on MCX Amid Crude Oil Price Surge and Worsening US–Iran Tensions.
Gold Prices Decline on MCX Amid Elevated US Dollar and Crude Oil Prices
Gold prices on the Multi Commodity Exchange (MCX) declined on Monday morning, 11 May, due to an elevated US dollar, which was driven by a rebound in crude oil prices. The dollar index rose by 0.20% after Brent Crude, the crude oil benchmark, jumped 5% to trade above the $105 per barrel level.
| Market | June Futures (MCX) | July Contracts (MCX) |
|---|---|---|
| Gold | ₹1,52,376 per 10 grams (-0.10%) | - |
| Silver | - | ₹2,63,599 per kg (+0.64%) |
The higher crude oil prices and the derailed US-Iran talks have fuelled inflation worries, strengthening the expectations of no rate cuts by the US Federal Reserve this year. Higher-for-longer interest rates are negative for non-yielding bullion, such as gold. The US-Iran episode remains a tough headwind for gold as well as stock markets.
Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
US President Donald Trump refused Iran's peace offer, terming it unacceptable. According to media reports, Trump said the US remains determined to confiscate Iran's remaining enriched uranium. Israeli Prime Minister Benjamin Netanyahu also stated that Iran's nuclear programme remains an unresolved threat despite recent military operations.
Meanwhile, Prime Minister Narendra Modi on Sunday urged Indians to use petrol, gas, diesel, and such things with great restraint, and to avoid purchasing gold for one year, amid the ongoing West Asia crisis.
Investor Takeaway
Higher crude oil prices and US-Iran tensions may negatively impact gold prices in the short term.
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