COMEX gold futures rose 1.17% to $4,124 per ounce, after touching an intraday high of $4,128.40 an ounce. Silver outperformed, with COMEX silver advancing 1.70% to $60.115 per ounce.
The rally in overseas markets comes a day after domestic bullion prices strengthened. In Delhi, gold rose by ₹800 to ₹1.47 lakh per 10 grams on Tuesday (July 21), supported by firm global cues and physical demand, while silver remained unchanged at ₹2.21 lakh per kg, according to local bullion traders.
Why are gold prices rising?
The biggest driver remains safe-haven demand.
Fresh concerns over the West Asia resurfaced after reports that two oil tankers carrying Saudi crude to Asia reversed course in the Red Sea following threats from Yemen’s Iran-backed Houthi rebels. The development renewed worries over global energy supplies and prompted investors to move towards traditional safe-haven assets such as gold.
Although diplomatic efforts continue, with Iran seeking Pakistan’s assistance to facilitate talks, markets remain cautious about the possibility of further escalation.
Gold typically benefits during periods of geopolitical uncertainty because investors view it as a store of value when risks to global growth or financial markets increase.
Fed policy remains in focus
Apart from geopolitical developments, investors are also positioning themselves ahead of the US Federal Reserve’s monetary policy meeting next week.
Markets broadly expect the Fed to leave interest rates unchanged. However, traders will closely watch the central bank’s commentary and economic projections for signals on the future path of monetary policy.
Interest rates are one of the biggest drivers of gold prices. Since gold does not generate interest income, higher rates generally reduce its appeal by increasing the returns available on fixed-income assets. Conversely, expectations of lower rates or a dovish policy stance tend to support bullion prices.
Physical demand continues to support prices
Apart from global macroeconomic factors, analysts say physical buying has also helped support the recent recovery in gold.
Demand from major consuming countries, particularly China, has remained resilient despite elevated prices. At the same time, continued purchases by central banks have provided an additional cushion to bullion prices over the past several months.
Silver, meanwhile, has also benefited from improving sentiment towards industrial metals, given its extensive use in electronics, solar panels and clean-energy technologies.
What analysts are saying
According to Jateen Trivedi, Vice President – Research Analyst (Commodity & Currency) at LKP Securities, the recent correction in gold helped absorb selling pressure, allowing prices to rebound sharply.
“The rebound was supported by renewed safe-haven buying amid ongoing US-Iran geopolitical tensions,” he said.
Trivedi added that despite higher crude oil prices and expectations of a cautious Federal Reserve, geopolitical uncertainty has revived investor interest in bullion. From a technical perspective, he expects MCX Gold to trade in the ₹1.41 per 10 grams-₹1.45 per 10 grams range over the next few sessions.
Meanwhile, Saumil Gandhi, Senior Analyst – Commodities at HDFC Securities, said recent gains have also been supported by resilient physical demand and continued buying by central banks.
-With Reuters inputs
