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Informist, Monday, May 12, 2025

By Ashutosh Pati

MUMBAI – Futures contracts of gold fell on the Multi Commodity Exchange of India and the COMEX Monday as safe-haven demand for the precious metal weakened after the US and China agreed to suspend most of the retaliatory tariffs for 90 days. Market sentiment was also hurt as the dollar index surged to an over one-month high.

The US and China have agreed to suspend most of the tariffs on goods imported from each other for 90 days, effective Wednesday, according to a joint statement released by the White House on Monday. The US reduced its reciprocal tariff on Chinese goods to 10% from 125%. With the 20% tariffs announced in February and March against Chinese goods remaining in place, the total tariff against Chinese goods will now be 30%. At the same time, China agreed to cut tariffs on US goods to 10% from 125%.

At 1715 IST, the most-active June GOLD contract on the MCX slumped 4.1% to INR 92,608 per 10 grams. The most active June gold contract on COMEX was down 3.7% at $3,221.0 per ounce.

Gold has dropped as easing trade tensions between the US and China impacted its safe haven status while the dollar rallied. A ceasefire between India and Pakistan has also buoyed risk sentiment and weighed on gold prices, analysts at ING said in a report. 

At 1720 IST, the dollar index, which measures the strength of the greenback against a basket of six major currencies, was up 1.1% at 101.75. A stronger dollar makes commodities such as gold--priced in the greenback--expensive for buyers holding other currencies, hence denting demand.

SILVER contracts fell on the MCX and the COMEX, tracking the fall in gold contracts. At 1722 IST, the most-active July silver contract on the MCX was down 1.8% at INR 94,981 per kilogram. The same-month contract on the COMEX was 1.4% lower at $32.44 per ounce.

Investors are waiting for a slew of economic data from the US this week, including the core consumer price index and the core producer price index.

Outlook for the rest of the session:

--MCX gold seen at INR 91,900–INR 93,100 per 10 gm

--COMEX gold seen at $3,180–$3,265 an ounce

--MCX silver seen at INR 92,000-INR 95,700 per kg

--COMEX silver seen at $32.10-$33.15 an ounce

End

US$1 = INR 85.37

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Saji George Titus

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