Gold, silver rally on weaker dollar, fall in crude prices

MCX silver futures are up by ₹12,196 or 5.4% to ₹2,36,137 per kg, while gold gained ₹5,522 or 4% to touch ₹1,44,434 per 10 grams, as easing inflation worries and a softer interest rate outlook lifted sentiment.

“The pullback in energy markets helped temper expectations of higher global interest rates, offering additional support to precious metals,” Hareesh V, head of commodity research at Geojit Investments said. “Meanwhile, reports suggesting the US is exploring ways to conclude the conflict with Iran boosted safe-haven demand, amplifying the upside momentum in bullion today.”

The 25 gold exchange-traded funds (ETFs) in the market rallied 3-5% on Wednesday, led by ICICI Prudential Gold ETF that hit a high of ₹124.98 compared to previous close of ₹119.57.

Nippon India Silver ETF, HDFC Silver ETF and ICICI Prudential Silver ETF gained up to 11%.

In Mumbai’s spot market gold was trading at ₹1,44,643 per 10 gm, up 3% from Tuesday, while silver was trading 3.85% up at ₹2,33,551 per kg. Gold has been in a downtrend since the start of the ongoing Israel-US-Iran conflict as investors pared positions to raise cash amid pressure on global energy trade and inflation fears. “More critically, gold’s price moves are being exacerbated by deleveraging among retail investors alongside selling from emerging-market players, including central banks that are liquidating bullion to shore up foreign exchange reserves amid elevated oil prices,” said Maneesh Sharma, AVP – commodities and currencies at Anand Rathi Share and Stock Brokers.

Hareesh of Geojit Investments said that while gold and silver may see a mild near-term recovery, they are unlikely to break recent highs. “While supportive geopolitics could underpin sentiment, a firm US dollar is likely to cap strong upside, keeping price movements relatively restrained for now,” he said.

Gold has rebounded nearly $500 per ounce from recent lows, but the correction underscores that the move is rarely linear. During the 2007-2008 global financial crisis, gold had corrected 30% due to liquidity and financial linkages.

“For Gold ETF investors, it helps to look past near-term noise and focus on the broader backdrop, which continues to support gold,” said Chirag Mehta, chief investment officer at Quantum AMC.

“For those looking to add exposure, or sitting underweight after earlier profit booking, the current dip offers a window to accumulate. A 15% allocation within a diversified portfolio remains reasonable, particularly given how correlated most other asset classes have become in periods of stress.”