Gold Prices Fall $81 per Ounce, Silver Drops $3 Amid Speculation Over US-Iran Deal

Middle East Conflict Weighs on Precious Metals Prices

Amid uncertainty over a potential end to the three-month-long conflict in the Middle East, precious metals traded with modest losses in Wednesday's session. The latest escalation in the region has reinforced concerns that inflation could remain elevated, keeping interest rates higher for longer.

Comex gold remained lower for the third straight session, dropping another $81 per troy ounce to the day's low of $4,421, marking its lowest level since late March. The recent decline also extended its month-to-date losses to 4%. The yellow metal has closed the last two months in the red and has lost over 15% of its value since the beginning of the conflict.

Silver prices also remained under pressure, falling nearly $3 per ounce to the day's low of $73.72. The white metal, which is more volatile than gold, has given up all of its May gains after falling sharply from the $90 mark. Over the last three months, including May, silver prices have declined nearly 20%.

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The fresh US attacks on Iran have raised concerns that a potential peace deal could be delayed further. However, the escalations have so far remained contained, while recent statements from US President Donald Trump and other American officials have kept hopes of a diplomatic resolution alive. US Secretary of State Marco Rubio stated that any agreement would likely take a few days to finalise, while earlier, President Donald Trump indicated that talks with Iran to end the conflict were "proceeding nicely."

Earlier this week, the US launched fresh strikes on Iran, while Tehran on Tuesday denounced the latest American attacks as a sign of "bad faith and unreliability." Investors are closely monitoring developments in the Middle East, as an end to the conflict could immediately push crude oil prices lower and ease fears of tighter monetary policy.

Demand for gold and silver generally remains stronger in a lower interest-rate environment. Precious metals witnessed sharp volatility throughout April as hopes of de-escalation, along with conflicting statements from both the US and Iran, kept prices largely directionless.

The conflict in the region, which has now stretched into its 88th day, has kept energy prices elevated as the effective closure of the Strait of Hormuz disrupted crude supplies, prompting several Middle Eastern nations to reduce production.

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

MCX Gold and Silver Prices

MCX gold hits a two-week low, while silver extends its sharp decline, tracking weakness in the international market. The near-month gold futures contract on MCX dropped ₹2,542 per 10 grams, slipping to ₹1,55,074, the lowest level since May 13. Over the last nine trading sessions, including today, the metal has fallen ₹6,904, based on today's low. Silver futures contracts also came under pressure, falling ₹7,356 per kilogram to the day's low of ₹2,63,272. After crossing the ₹3 lakh mark, silver failed to sustain the rally and has so far declined by ₹41,619 from its peak, based on today's low.