Precious metals, which had shown a limited reaction to the ongoing US-Israel conflict with Iran, witnessed strong buying in Tuesday’s session, largely driven by a drop in the US dollar as investors turned their attention to central bank meetings, making dollar-priced commodities more attractive for other currency holders.
The April futures contract on COMEX gold gained $47 to the day’s high of $5,049 per troy ounce on 17 March, while the May silver contract on COMEX also jumped, gaining $2.08 per troy ounce to reach a day’s high of $82.76 earlier in the session.
Though both gold and silver staged a strong rebound from a four-day slump, they as crude oil prices resumed their upward move, fueling inflation concerns and raising questions about whether global economies are returning to a 2022-style environment, when central banks launched an aggressive tightening cycle to contain price pressures triggered by the Russia-Ukraine conflict, which pushed Brent crude to $139 per barrel.
Rate outlook turns uncertain as oil rally complicates policy path
Major central banks will announce their policy decisions this week, starting with the on Wednesday, followed by the European Central Bank, the Bank of England, and the Bank of Japan a day later.
They are all expected to keep rates unchanged, but investors will focus on any clues on how policymakers might respond to the conflict in the Middle East.
Prices of , gasoline, natural gas, and fertilisers have surged since the US and Israel began their bombardment of Iran more than two weeks ago, which could both slow economic growth and push inflation higher.
Traders are pricing in nearly two rate hikes by the European Central Bank in 2026, a sharp shift from the roughly 50% probability of a rate cut seen before the conflict began. Expectations for Federal Reserve easing have also been scaled back, with markets now pricing in about 25 basis points of cuts this year.
The US dollar index, which measures the greenback against a basket of six major currencies, was down 0.26% at 99.56.
The dollar had climbed above 100.3 on Friday, its highest level since mid-May 2025, and ended last week up 1.66%, marking its second consecutive weekly gain. So far this month, the dollar has strengthened by 2%, the biggest monthly gain since July 2025, when it rose 3.37%.
Demand for the US dollar has strengthened since the start of the Middle East conflict as investors re-routed funds back to US equities from emerging markets, while the dollar retained its status as a safe-haven asset.
MCX gold jumps over ₹1,800 per 10g; silver nears ₹2.63 lakh per kg
In the domestic market, the April futures contract on MCX gained ₹1,844 per 10 grams earlier in the day to reach a day’s high of ₹1,57,580 per 10 grams. However, the yellow metal closed last week 2% lower, extending its losing streak to a second consecutive week.
The May futures contract on MCX rallied ₹6,367 per kilogram to hit a day’s high of ₹2,62,899. The white metal, too, ended last week with a 3.30% decline, adding to a 5% drop in the first week of March and taking its month-to-date losses to 9%.
(With inputs from Reuters)
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