Gold Prices Rise $65 per Ounce, Silver Surges $2 as Oil Prices Decline and Dollar Weakens

Precious Metals Rebound in Tuesday's Trade

Precious metals experienced a rebound in Tuesday's trade on June 2, supported by a retreat in crude oil prices and a softer US dollar. The rebound came after both gold and silver extended their losing streak to a second straight day in the previous session.

Comex gold prices rebounded by $65 per ounce to touch a day's high of $4,571, while silver futures recovered $2.1 to reach an intraday high of $77.35 per ounce. Analysts attributed the rebound to a pullback in crude oil prices, which eased fears of an inflation shock stemming from tensions in West Asia. The yield on the benchmark 10-year US Treasury note also fell 1.1%, reducing the opportunity cost of holding non-yielding bullion.

Crude oil prices surrendered nearly half of Monday's gains after US President Donald Trump said negotiations with Iran were continuing at a "rapid pace", easing concerns that talks had completely broken down. A partial ceasefire announcement between Hezbollah and Israel also contributed to stabilizing geopolitical risk sentiment.

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Markets are now focused on Friday's US nonfarm payrolls report and commentary from Federal Reserve officials for clues on the interest-rate path. Domestic brokerage firm Kotak Securities noted that while gold remains in a short-term downtrend below $4,630, persistent geopolitical uncertainty, growth risks, currency volatility, and potential downside in equities continue to provide a strong long-term bullish foundation for bullion.

During Monday's session, both Comex gold and silver had closed lower after Iran reportedly said it would suspend the exchange of messages with the US in response to Israel's intensifying military operations in Lebanon. Precious metals witnessed sharp volatility throughout May as hopes of de-escalation, along with conflicting statements from both the US and Iran, kept prices largely directionless.

The tensions in the region, which have now stretched into a fourth month, have 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

In the domestic market, the near-month gold futures contract on MCX jumped ₹6,458 per 10 grams to touch the day's high of ₹1,60,710, the highest level since May 15. If the rally sustains through the close, it would snap the yellow metal's two-day losing streak. Silver prices also rallied sharply on MCX, gaining ₹5,248 per kilogram to hit the day's high of ₹2,71,411.

Domestic gold prices also received support from weakness in the Indian rupee. The softer rupee helped offset some of the pressure from global market uncertainty and supported gains in the domestic bullion market, according to Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities.