- Gold and silver prices rose sharply on MCX amid easing US-Iran tensions and global gains
- MCX gold futures gained 1.54% to Rs 1,49,793 per 10 grams and silver rose 3.56% to Rs 2,33,876 per kg
- Softer crude oil and weaker US dollar boosted metals, easing supply concerns in the Strait of Hormuz
Precious metals jumped on Multi Commodity Exchange of India (MCX) today, August 7, tracking gains in the global market amid hopes of easing tensions between US and Iran.
At 4:36 pm on Friday, MCX gold September futures contract rose 1.54% or Rs 2,271 to Rs 1,49,793 per 10 grams, while the MCX silver September futures soared 3.56% or Rs 8,040 to Rs 2,33,876 per kg.
The latest surge comes as the yellow metal rallies in the global market with spot gold gaining around 1.9% nearing $4,300 an ounce.
Why gold, silver are rising today?
According to Kaynat Chainwala, AVP Commodity Research, Kotak Securities, "both metals are on track for their strongest weekly performance since January, supported by softer crude oil prices and a weaker US dollar, as hopes of a shipping arrangement through the Strait of Hormuz eased concerns over supply disruptions. This offset Thursday's report that Iran's parliament was reviewing restrictions on “hostile” vessels transiting the waterway."
Brent crude dipped to $81.74 a barrel after rallying nearly 4% in the previous session, while West Texas Intermediate traded around $76. A dip in crude oil price typically lifts up gold prices rise as lower oil costs reduce overall inflation concerns, which can push US Federal Reserve to keep interest rates low or cut them. As gold pays no interest, lower rates make gold more attractive to buyers.
The Bloomberg Dollar Spot Index, a gauge of the US currency, remained slightly lower after gaining 0.2% on Thursday. A weak dollar boost demand for gold as the precious metal is priced in American currency.
Meanwhile, US President Donald Trump on Thursday reiterated his belief that the war between the United States and Iran will conclude soon, while pushing back against reports that American munitions stockpiles were running low.
Speaking to reporters in the Oval Office, Trump said, "I started the very important excursion into the Islamic Republic of Iran, it was a very important excursion because they can't have a nuclear weapon. I think the war is going to end soon, I don't think they can go much longer."
His comments come as US officials signal that a deal is close on reopening the Strait of Hormuz, a critical Gulf shipping corridor that has seen repeated disruptions since the war began.
ALSO READ: What Are 24K And 22K Prices In Mumbai, Delhi, Chennai, Kolkata, Bengaluru on August 7?
What should traders expect now?
Speaking on outlook for gold, Chainwala said, "Market attention now turns to today's US nonfarm payrolls report, the week's key catalyst for Federal Reserve rate expectations. Traders currently assign a 55% probability to a September rate move, down from 63% a week earlier, according to CME FedWatch. The payrolls report remains the key swing factor as a softer payrolls outcome could reinforce expectations of a more patient Fed and provide further support to precious metals, while a strong reading may prompt profit-taking."
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