Gold, silver prices steady as oil spikes and dollar strengthens
What's the story
Gold prices held steady on Tuesday, with COMEX gold trading at $4,833.10 per ounce, a marginal gain of 0.09%. However, silver prices witnessed a slight decline of 0.7% to $79.48 per ounce on the COMEX platform. The mixed performance of global precious metals was driven by easing oil prices and currency movements against the backdrop of persistent geopolitical tensions in West Asia.
Oil market
Oil prices fall in early trade
Oil prices, a key factor in inflation expectations, fell in early trade on Tuesday. Brent crude slipped by about 0.7% to $94.8 per barrel after a sharp rise in the previous session. The decline comes as markets react to the possibility of renewed talks and partial easing of supply disruptions amid ongoing geopolitical tensions in West Asia. Asian equities also opened higher on Tuesday, with benchmark indices in Japan, South Korea, Australia, and India making gains.
Geopolitical impact
US-Iran standoff continues to influence market direction
The US-Iran standoff, particularly around the Strait of Hormuz, remains a key factor influencing market direction. While there are tentative signs of dialogue, uncertainty persists over whether a durable ceasefire can be achieved. Disruptions in energy supply have already heightened inflation risks globally. Typically, such conditions support gold as a hedge but the impact is being counterbalanced by expectations of tighter monetary policy.
Dollar influence
US dollar gains against major currencies
The US dollar recently hit a one-week high, reflecting resilience in the American economy and shifting expectations around interest rates. Markets have sharply reduced bets on Federal Reserve rate cuts, with yields on 10-year Treasuries rising above 4.5%. Higher interest rates tend to weigh on non-yielding assets like gold and silver, limiting their upside despite safe-haven demand.
Investor activity
Strong investor flows into gold ETFs
Investor flows into gold-backed exchange-traded funds (ETFs) remain robust, with net inflows of about 21 tons globally in early April. This indicates sustained institutional interest even outside crisis periods. Central banks have also continued accumulating gold reserves, particularly in emerging markets such as China and India, reinforcing long-term demand for the precious metal.
Market dynamics
Silver's outlook remains complex
Silver's outlook remains more complex with persistent supply constraints and strong import demand from China. However, industrial demand—a key pillar for silver— is expected to soften slightly this year, creating near-term pressure on prices. Policy-related disruptions such as India's temporary import curbs have also added uncertainty in the silver market.