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Informist, Thursday, May 15, 2025

By Abhijit Doshi

MUMBAI – Gold prices fell for the second day Thursday on the Multi Commodity Exchange of India and COMEX on indications of further easing of the geopolitical situation, reducing the precious metal's safe-haven appeal. Signals of fewer-than-expected rate cuts by the US Federal Reserve this year also affected demand for the non-yielding metal.

At 1624 IST, June GOLD futures on COMEX were trading at $3,181.9 per ounce, down 0.2% from the previous close. The same-month contract on the MCX was also down 0.2% at INR 92,053.

The trigger for Thursday's market fall was comments Thursday by US President Donald Trump during a visit to West Asia, where he said talks with Iran on a nuclear deal were possible, as per a CNN report. Trump added that both Syria and Yemen deserve a chance, which is seen as a huge step towards defusing the tensions in West Asia.

This followed easing of the tariff war between the US and China earlier this week. In the meantime, there were reports that China had suspended its ban on exports of items with both military and civil applications to 28 US companies.

Apart from the geopolitical situation easing, the market is concerned with the interest-rate trajectory in the US after these developments. "The fall (in prices of gold) is attributed to signals of fewer than anticipated Federal Reserve rate cuts amid an improving US economic outlook post the US-China trade truce, which has boosted US Treasury yields, negatively impacting non-interest-bearing gold," Kotak Securities said in a note.

Supporting this view, ICICI Direct said: "In light of easing trade tension, traders have dialed back expectation for rate cuts from US Federal Reserve this year. Market expects first cut of at least 25 bps at central bank's September meeting."

SILVER prices, too, declined by 0.6% to INR 94,881 per kg on the MCX, and by an equal extent to $32.26 per ounce on COMEX, as renewed optimism around global trade dampened the metal's safe-haven appeal, said Kedia Advisory in a note. The easing of trade tensions between the US and China, including a 90-day pause on tariff hikes and direct involvement by Trump and China's President Xi Jinping in negotiating the deal, and improved risk sentiment pulled investors toward riskier assets, it said. Silver prices also fell, tracking losses in industrial metals, which were down on profit sales.

In the remaining part of the day's trade, market focus is expected to be on data coming out of the US, such as Producer Price Index, retail sales, unemployment claims, and the manufacturing indices. The market will also focus on the speech by Fed Chair Jerome Powell for cues on the monetary policy direction.

Outlook for the rest of the session:

--MCX gold seen at INR 90,900-NR 92,250 per 10 gm

--COMEX gold seen at $3,050-$3,260 an ounce

--MCX silver seen at INR 93,000-INR 95,700 per kg

--COMEX silver seen at $31.15-$33.83 an ounce

End

US$1 = INR 85.55

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

Edited by Rajeev Pai

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