Gold, silver face fresh test as US dollar, Iran crisis to shape week ahead: Analysts

Gold and silver are likely to remain under pressure next week as investors assess the impact of renewed hostilities between the US and Iran, movement in crude oil prices and a raft of macroeconomic data, analysts said.

Market participants will closely watch manufacturing and services PMI from major economies, inflation data from the Eurozone, and the US nonfarm payrolls and unemployment figures for fresh cues on the trajectory of the Federal Reserve's monetary policy.

Geopolitical developments are also expected to remain in focus after US-Iran negotiations came to a standstill following a sharp escalation in military conflict, they added.


"For gold and silver prices, the momentum still remains down and corrective," said Pranav Mer, Vice President, EBG - Commodity & Currency Research, JM Financial Services Ltd.

On the Multi Commodity Exchange, gold futures for August delivery fell Rs 3,041, or 2.06 per cent, during the week to settle at Rs 1.44 lakh per 10 grams. Silver for the September contract plunged Rs 15,269, or 6.4 per cent, to Rs 2.23 lakh per kilogram.

"Gold remained under significant selling pressure last week, ending lower by 2 per cent, extending its week-on-week decline as persistent US dollar strength continued to weigh on precious metals," Jateen Trivedi, VP Research Analyst, Commodity and Currency, LKP Securities, said.

He added that crude oil prices corrected sharply by nearly 10 per cent, which eased inflation concerns, reducing gold's appeal as an inflation hedge, and investors continued to favour the US dollar over bullion.

In overseas markets, Comex gold futures fell USD 149.6, or 3.5 per cent, during the last week to close at USD 4,096.3 per ounce, while silver slumped USD 7.13, or 10.7 per cent, to USD 59.67 per ounce in New York.

Mer said gold recovered modestly on Friday on bargain buying after US Personal Consumption Expenditures data showed inflation rose at a slower pace than the previous month.

Continued gold purchases by China's central bank, following fresh US-Iran strikes, and President Donald Trump's threat of 100 per cent tariffs on the European Union also supported prices.

However, higher US Treasury yields capped gains, while silver remained under pressure due to weak industrial metals, a stronger dollar and subdued demand, he added.

Analysts said bullion prices will largely hinge on the upcoming US economic data, Federal Reserve officials and the direction of the US dollar.