Fed meeting, US-Iran talks likely to lead to selling pressure in gold, silver: Analysts

Analysts said gold and silver could face selling pressure this holiday-shortened week as traders eyed peace talks between the US and Iran, crude oil rates and the Federal Reserve’s policy decision.

Local commodity markets will remain closed on Friday due to Maharashtra Day.

“Next week will focus on progress in peace talks between the US and Iran and its potential impact on oil, gold and broader financial markets,” said Pranav Mer, vice president, EBG – Commodity & Currency Research, JM Financial Services Ltd.

On the macroeconomic front, traders will be watching the monetary policy decisions of the US Federal Reserve, the Bank of Japan, the Bank of England and the European Central Bank.

Apart from this, key US data on housing, personal consumption expenditures (PCE) inflation and consumer confidence, factory activity figures from major economies later in the week will also guide sentiment, he added.

Analysts said the April 29 meeting of the Federal Open Market Committee (FOMC) will be the last one chaired by Jerome Powell, making the policy statement and post-meeting press conference particularly important for precious metals prices.

On the Multi Commodity Exchange, gold futures traded at Rs. 1,910 or 1.23 percent down to Rs. 1.54 lakh per 10 grams, while silver closed at Rs. 12,506 or 4.9 percent down to Rs. 2.44 lakh per kg was settled.

According to analysts, the fall in gold in the domestic market was limited by a weaker rupee, which fell by around 1.4 percent during the previous week.

In international markets, Comex gold fell USD 138.7 or 2.8 percent to end the week at USD 4,740.9 an ounce and silver shed USD 5.4 or 6.6 percent to USD 76.41 an ounce.

“Gold prices pared some recent gains last week after failing to breach the USD 5,000 per ounce level in the international market and were weighed by several factors, including profit-booking after a 10-12 percent gain in the previous four weeks,” Mayer said.

Meanwhile, the US-Iran blockade on the Strait of Hormuz pushed crude oil prices above USD 100 per barrel.

May added that demand for the US dollar and Treasury bond yields remained firm. Stronger-than-expected US retail sales, weekly jobless claims and consumer sentiment data supported the greenback and weighed on gold and silver.

He further said that buying and selling activity among global central banks has been mixed, while uncertainty about future interest rate cuts or a rise amid higher commodity-led inflation could keep bullion prices volatile.

Going forward, analysts expect gold to find support near the lows but remain vulnerable to a further correction if the dollar holds firm and geopolitical risks ease. Silver can be more volatile because of its dual role as both a precious and an industrial metal.

Analysts added that any rising tensions in West Asia, especially developments around the Strait of Hormuz or dovish signals from major central banks, could revive buying interest.