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Informist, Wednesday, May 14, 2025

By Abhijit Doshi

MUMBAI – Futures contracts of gold were down on the Multi Commodity Exchange of India and COMEX on Wednesday as the US-China trade tensions seemed easing. The temporary reduction in tariffs between the two nations diminished gold's safe-haven appeal.

At 1723 IST, the most active June future contract of gold on MCX was trading at INR 93,340 per 10 gram, down 0.3% from the previous close, while the same month contract on COMEX was down 0.5% at $3,230.3 per ounce.

On Monday, the US and China agreed to temporarily scale back steep tariffs, cutting them to 30% and 10%, respectively, for 90 days, alleviating global recession fears and boosting risk sentiment.

US President Donald Trump Tuesday said he might personally engage with Chinese President Xi Jinping to work out the final terms of a trade deal. While these shifts could offer the Federal Reserve greater flexibility on monetary policy, lingering concern about a potential tariff-induced inflation rebound kept markets cautious, according to a note by investing.com.

The resulting uncertainty over the Fed's rate trajectory weighed on gold prices, which typically benefit from lower interest rates due to reduced opportunity costs. However, the lower inflation figure in the US was viewed as supporting potential Federal Reserve rate cuts, which could benefit non-yielding assets like gold.

April's US CPI data, released Tuesday, showed inflation easing slightly, with the headline annual rate at 2.3%, down from 2.4%, and core inflation steady at 2.8%. Monthly CPI rose 0.2%, softer than the expected 0.3%, suggesting limited immediate tariff impact. Notably, gold ETFs saw substantial net inflows of 115 tonnes in April, the largest in over three years, with China contributing nearly 65 tonnes, as reported by the World Gold Council, Kotak Securities said in a note.

Silver prices on MCX were slightly up while they were marginally down on COMEX. At 1645 IST, the most active July silver contract on MCX was INR 96,923 per kg, up from previous close. The same-month contract on COMEX was down 0.02% at $33.0 per ounce.

Outlook for the rest of the session:

--MCX gold seen at INR 92,900–INR 94,000 per 10 gm

--COMEX gold seen at $3,122–$3,331 an ounce

--MCX silver seen at INR 95,300-INR 98,600 per kg

--COMEX silver seen at $31.55-$33.65 an ounce

With no major economic data due, the market will watch for further cues after Trump visited Saudi Arabia and secured $600 billion in trade deals. On Thursday, Ukrainian President Zelenskyy is likely to meet Russian President Vladimir Putin in Istanbul for peace talks.  End

US$1 = INR 85.27

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

Edited by Subhojit Sarkar

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