Precious metals are under significant selling pressure as gold and silver prices fell close to their December lows. In early Asian trade, spot gold fell below the $4,200 per ounce mark, while spot silver slipped below the $64 per ounce mark, reaching its lowest levels in over six months.
In international markets gold is hovering near the $4,175 per ounce mark, down over 25% from its peak of $5,602, which it hit earlier this year. Its restless cousin silver too slipped towards the $63 per ounce mark, sliding nearly 48% from its all-time high of $121. It had breached $120 levels in late January.
The price action for these assets came primarily on the back of a rise in oil prices, which further mounted inflationary pressures, reinforcing expectations of tighter monetary policy by central banks globally.
Oil rises 1% in early trade- Geopolitics no longer bullish
Oil prices rose nearly 1% in early Asian trade over renewed hostilities in the West Asia conflict as the US military launched strikes against Iran after its Apache helicopter was brought down by Tehran off the coast of Oman on Monday.
Brent crude futures were quoted near the $92 per barrel mark, while US benchmark- West Texas Intermediate futures were trading around the $89 per barrel level. The rise in Brent futures came after they had plunged nearly 5% in the previous session.
As oil prices continue to trade at elevated levels, market participants have increased expectations of rate hikes by the US Federal Reserve later in December.
“Geopolitics is no longer automatically bullish for gold. If geopolitical tensions result in higher oil prices, higher inflation expectations, and a more hawkish Fed outlook, gold can actually fall because rising real yields dominate the safe-haven bid and that’s what we are witnessing,” said Kunal Sodhani, treasury head at Shinhan Bank India.
Markets would now watch out for key US economic data, including inflation reports and CPI data, for more cues on gold prices.
“If we can break the $4,100 level, I think the path of resistance fundamentally changes for gold, and we might be starting to look at $3,500 as the next level into the end of the year,” Reuters quoted Ilya Spivak, head of global macro at Tastylive, as saying.
MCX Gold and Silver futures down 1%
Selling pressure was also seen on the domestic front as MCX Gold and Silver futures slipped over 1% in the opening session.
MCX gold futures for August opened at Rs 1,50,202 per 10 grams down 1.5% from its previous close, while MCX Silver futures for July were down 1.4% quoted at Rs 2,35,256 per kg mark.
China on a gold buying spree
While gold prices continue to dip, financial publication, The Kobeissi Letter, in a social media post reported that China’s central bank recorded one of its strongest gold purchases since January 2025, as it added over 10 tonnes of gold to reserves in May.
This comes in addition to 8 tonnes of gold the People’s Bank of China acquired in April, marking its third monthly net purchase. The country’s gold reserves now stand at 2,331 tonnes, accounting for over 9% of its total foreign exchange reserves, Kobeissi added.
Kobeissi noted that the country now ranks as the third-largest central bank gold buyer, and its demand for the yellow metal will continue to accelerate.
