New Delhi, May 26 (PTI) Gold prices declined by Rs 2,800 to Rs 1.62 lakh per 10 grams in the national capital on Tuesday as military tensions between Washington and Tehran drove investors towards the US dollar.
According to the All India Sarafa Association, the yellow metal of 99.9 per cent purity depreciated by Rs 2,800 to Rs 1,62,400 per 10 grams (inclusive of all taxes).
On Monday, gold had settled higher at Rs 1,65,200 per 10 grams.
“Gold prices turned lower on Tuesday and moved within a narrow range as uncertainty surrounding US-Iran negotiations kept investors cautious,” Saumil Gandhi, Senior Analyst – Commodities at HDFC Securities, said.
With no breakthrough on the diplomatic front, market participants largely stayed on the sidelines, avoiding aggressive positions and waiting for clearer signals on the geopolitical front, he added.
Silver, however, rose Rs 2,000 to Rs 2,73,000 per kilogram (inclusive of all taxes), as per the association.
It had finished at Rs 2,71,000 per kg in the previous session.
“The ongoing lack of clarity has left precious metals in a state of consolidation, with the market also closely monitoring movement in crude oil, the US dollar, and Treasury yields for direction,” Gandhi said.
In the international markets, spot gold fell nearly 1 per cent to USD 4,534.69 per ounce, while silver slipped a little over 2 per cent to USD 76.49 per ounce.
Analyst said market sentiment weakened after reports of fresh US military strikes on southern Iran despite ongoing negotiations in Qatar aimed at preserving a seven-week-old ceasefire.
The United States Central Command said the operations were defensive in nature and did not signal an end to the ceasefire arrangement.
Meanwhile, Iran’s Islamic Revolutionary Guard Corps claimed that it had shot down a US drone that entered Iranian airspace, adding another layer of uncertainty to already fragile negotiations.
The renewed tensions pushed crude oil prices higher, reviving fears that elevated energy costs could sustain inflationary pressures globally and force central banks to maintain tighter monetary policy for longer.
Saumil Gandhi said any progress toward a potential agreement could alleviate tensions in the energy market and address inflation concerns, creating a more favourable environment for precious metals.
“Conversely, any setbacks in negotiations could reignite fears of inflation due to rising energy prices, which would reinforce expectations for tighter monetary policy and put additional pressure on gold and silver prices,” he added.
Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, said investors are now awaiting the upcoming US Core Personal Consumption Expenditures (PCE) inflation and GDP numbers, which could significantly influence the Federal Reserve’s expectations and bullion movement in the near term.
