Gold Prices Rise $76 per Ounce, Silver Gains $5 per Ounce Amid Dollar Weakness and Easing Geopolitical Tensions

Global Markets React to Easing Tensions in the Middle East

The global markets continued to trade higher for the third consecutive session on Thursday, May 7, as expectations strengthened that the US and Iran could finally seal an agreement to end the two-month-long conflict in West Asia. This development also kept crude oil prices under pressure, easing concerns over inflationary pressures and reducing expectations that central banks would need to maintain restrictive policies for longer.

In the commodity market, the price of gold continued to rally, rising $76 per troy ounce to an intraday high of $4,770 on the COMEX. This represents a 2.75% jump in the previous session, marking its biggest advance since late March. Silver prices also extended their winning run, rising $5 to $82.43 per ounce, after the white metal had gained 5% on Wednesday.

The latest rally has propelled the price of gold to a 2.5% gain for the week, while silver prices gained even more sharply by 7.8%. The easing of tensions in the Middle East, which had kept precious metals under severe volatility, appeared to be a key factor contributing to the rally.

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According to reports, Iran is reviewing the latest American proposals aimed at ending the war. The US had sent a one-page memorandum of understanding through Pakistani intermediaries to formally end the conflict and pave the way for the gradual reopening of the Strait of Hormuz. US President Donald Trump posted on social media that the two-month war could soon end, and that oil and natural gas shipments disrupted by the conflict could restart, pending an agreement from Iran.

Comparison of COMEX Gold and Silver Prices

In the commodity market, Brent crude, the international benchmark, declined $5 to an intraday low of $96.32 a barrel, extending losses that erased the sharp gains recorded earlier this week. Meanwhile, the dollar index slipped below 98 on Thursday, extending losses from the prior session as markets made greenback commodities less expensive for other currency holders.

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

Markets await the monthly US employment report on Friday to assess how the Fed will move forward with monetary policy this year. While the falling crude oil prices re-ignited hopes of rate cuts, Federal Reserve Bank of Chicago President Austan Goolsbee and President of St. Louis Fed Alberto Musalem struck a note of caution, highlighting that inflation is running above the target of 2%, Bloomberg reported.

Indian Markets React to Global Rally

Tracking the strong rally in the international market, the near-term gold futures contract on MCX gained ₹1,733 to hit the day's high of ₹1,53,865 per 10 grams. In the previous session, the yellow metal had gained 1.6%, or ₹2,379, marking its biggest intraday gain since April 14. Silver futures on MCX also extended gains, rising ₹12,235 per kg to reclaim the ₹2.65 lakh mark and touch an intraday high of ₹2,65,500 per kg. So far this week, the white metal has gained ₹13,500.