COMEX Gold was trading at $4,126.20 an ounce, down 0.35%, while COMEX Silver fell 0.44% to $60.48 an ounce in early trade.
The weakness comes after a volatile week in which bullion prices swung sharply on changing headlines around the US-Iran conflict, crude oil prices and expectations for US interest rates.
Why are gold and silver prices fluctuating?
Gold and silver have been reacting to multiple global factors at once.
Geopolitical tensions resurfaced after fresh exchanges between the US and Iran raised concerns about the stability of the Strait of Hormuz, a key global oil shipping route. While higher geopolitical risk typically supports safe-haven assets like gold, investors have largely remained focused on the strength of global equity markets, particularly the rally in artificial intelligence and semiconductor stocks.
At the same time, Brent crude is headed for its strongest weekly gain since early May, raising concerns that sustained higher oil prices could fuel inflation and influence central bank policy.
Fed outlook remains a key trigger
Analysts say expectations around US interest rates continue to be the biggest driver for bullion.
According to Justin Khoo, Senior Market Analyst (APAC) at VT Markets, a multi-asset broker, the latest Federal Reserve meeting minutes indicate a more flexible policy approach with reduced forward guidance, but also a greater willingness to keep interest rates higher if inflation remains elevated.
Higher interest rates generally reduce the appeal of non-yielding assets such as gold.
Khoo noted that while the Fed’s hawkish stance has weighed on bullion in the near term, any loss of confidence in the central bank’s credibility could revive demand for gold as a safe-haven asset over the longer term.
Headline-driven moves likely to continue
Kaynat Chainwala, AVP – Commodity Research at Kotak Securities, a full-service stock brokerage firm and a subsidiary of Kotak Mahindra Bank, said bullion has been witnessing sharp two-way moves as markets react to every development in the West Asia conflict.
She noted that gold and silver recovered from recent lows after reports suggested Iran had reached out to Washington seeking a peace deal, easing some geopolitical concerns. However, the recovery remained limited as investors also weighed the Fed’s cautious stance and persistent inflation risks.
According to Chainwala, unless there is a durable de-escalation in the conflict, gold and silver are likely to remain highly sensitive to geopolitical headlines as well as upcoming US economic data, including labour market indicators that could shape expectations for future Federal Reserve decisions.
What happened in the domestic market?
On Thursday (July 9), gold prices in the national capital fell for the fourth consecutive session, declining ₹350 to ₹1.48 lakh per 10 grams. Silver also dropped sharply by ₹7,800 to ₹2.32 lakh per kilogram.
Market participants attributed the decline largely to the appreciation of the Indian rupee against the US dollar and subdued local demand, which offset gains seen in overseas bullion prices.
What investors should watch
Going ahead, bullion prices are likely to track:
- Developments in the US-Iran conflict and broader geopolitical risks.
- Movement in crude oil prices and their impact on inflation expectations.
- Upcoming US economic data, particularly labour market indicators.
- Signals from the Federal Reserve on the future path of interest rates.
With these factors pulling prices in opposite directions, analysts expect gold and silver to remain volatile in the near term rather than move in a single direction.
-With Reuters inputs
