Gold, silver face fresh test on US dollar, Iran crisis to take shape next week: Analysts

Gold and silver are likely to remain under pressure next week as investors assess the impact of renewed hostilities between the US and Iran, volatility in crude oil prices and macroeconomic data, analysts said.

Market participants will closely monitor manufacturing and services PMIs from major economies, inflation data from the Eurozone and US nonfarm payrolls and unemployment figures for new signals on the Federal Reserve’s monetary policy path.

The focus is also expected to remain on geopolitical developments after US-Iran talks stalled following a sharp escalation in military conflict, they added.

“For gold and silver prices, the momentum is still bearish and corrective,” said Pranav Mere, Vice President, EBG – Commodity & Currency Research, JM Financial Services Ltd.

On the Multi Commodity Exchange, gold futures for August delivery fell during the week to Rs. 3,041 or 2.06 percent down to Rs. 1.44 lakh per 10 grams was settled. Silver price for September contract Rs. 15,269 or 6.4 percent down to Rs. 2.23 lakh per kg.

“Gold remained under significant selling pressure last week, ending 2 percent lower, extending week-on-week declines,” said Jatin Trivedi, VP Research Analyst, Commodities & Currencies at LKP Securities.

He added that crude oil prices recovered sharply by about 10 percent, which eased inflation concerns, reduced the appeal of gold as an inflation hedge and that investors continued to favor the US dollar over bullion.

In overseas markets, Comex gold futures fell USD 149.6, or 3.5 percent, to USD 4,096.3 an ounce over the past week, while silver fell USD 7.13, or 10.7 percent, to USD 59.67 an ounce.

Gold recovered modestly on Friday on bargain buying after U.S. personal consumption expenditure data showed inflation rose at a slower pace than last month, May said.

Gold purchases by China’s central bank continued following fresh US-Iran strikes and President Donald Trump’s threat of 100 percent tariffs on the European Union also supported prices.

However, the US Treasuries limited gains to higher yields, while silver remained under pressure from weaker industrial metals, a stronger dollar and lower demand, he added.

Analysts said bullion prices will largely depend on upcoming US economic data, Federal Reserve officials and the direction of the US dollar.