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Gold and silver erased their recent gains, plunging sharply on Monday, 4 May, as renewed tensions in the Middle East triggered a sharp rebound in crude oil prices, intensifying inflation concerns, while a stronger US dollar also weighed on precious metals.
COMEX gold futures dropped $134 per troy ounce to an intraday low of $4,681, marking the lowest level in a month.
The sharp correction has brought the yellow metal’s year-to-date gains down to 4.50%, while from its yearly high, gold is now lower by 24.5%. Silver futures fell $4 to $72, erasing most of their recent gains.
Tensions in West Asia escalated after Iran’s semi-official Fars news agency reported on Monday that two missiles had struck a US warship near the port of Jask, located at the southern entrance to the Strait of Hormuz, where Iran’s navy maintains a base.
However, US Central Command denied the report in a post on X, saying, “No U.S. Navy ships have been struck. U.S. forces are supporting Project Freedom and enforcing the naval blockade on Iranian ports.”
Iran's military had earlier on Monday warned US forces not to enter the Strait of Hormuz after President Donald Trump said the US would start helping to free ships stranded in the Gulf by the US-Israeli war on Iran. He provided few details of the plan.
The renewed tensions dimmed hopes for a swift resolution to energy supply disruptions, which have been fuelling inflationary pressures and, in turn, raising the likelihood of higher interest rates.
Many global brokerage firms are now expecting no rate cuts from the Federal Reserve this year. Last week, the Fed left rates unchanged in its most divided decision since 1992 amid deepening concerns about higher energy prices filtering through the economy.
Bullion is traditionally viewed as an inflation hedge; however, higher interest rates reduce its appeal as a non-yielding asset.
Meanwhile, the rebound in the US dollar index is also impacting the metals rally, as a stronger dollar makes dollar-denominated commodities more expensive for holders of other currencies. The index rose to 98.4, rebounding from the near two-month lows touched last week.
Going ahead, investors’ focus will be on several speeches from Federal Reserve officials and a slate of key economic data releases, including the closely watched jobs report.
Tracking weakness in the international market, the near-month gold futures contract on MCX fell ₹2,592, breaking below the ₹1.49 lakh, dropping to ₹1,48,760 per 10 grams. The silver futures contract on MCX, too, crashed ₹9,824 per kilogram to the day’s low of ₹2,41,113.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
Ksheera Sagar has been working as a Market Research Analyst at LiveMint for the past four years, covering stocks, commodities, and broader financial markets. In this role, he closely tracks daily market movements, corporate earnings, sector trends, and macroeconomic developments. <br><br> He has over a decade of experience in the financial services industry and has previously worked with multiple organisations, including global investment bank J.P. Morgan, bringing strong research experience into the newsroom. <br><br> During his career, he has gained extensive exposure to equity research, market analysis, and financial data interpretation, strengthening his expertise across asset classes and market cycles. <br><br> He is known for his data-driven analysis and crisp, listicle-style market stories that break down complex financial developments across key markets for a wide audience. His strong research skills enable him to write detailed and insightful stories on stocks and sectors, focusing on the underlying factors driving market movements. <br><br> His work combines quantitative insights with clear storytelling, presenting financial developments in a clear and structured manner. Moreover, he enjoys writing multibagger and listicle-style copies. Outside of work, Ksheera enjoys playing the piano and exploring new places. He has a keen interest in travel, music, and continuously learning about global markets and economic trends.
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