Synopsis: Gold prices remained under pressure as rising expectations of a September Fed rate hike offset safe-haven demand from ongoing US-Iran tensions. MCX Gold August futures declined 0.62% to ₹1,44,401, extending domestic weakness.
Bullion markets globally are caught between safe-haven demand from Middle East conflict and the dampening effect of higher expected interest rates on non-yielding assets. This tension between geopolitical risk and monetary tightening is shaping near-term direction for gold, silver and related mining and jewellery-linked businesses worldwide.
Spot gold traded near $4,112 per ounce, down around 0.28% intraday after touching a high of $4,123.72 earlier in the session. Meanwhile, MCX Gold August futures fell ₹899 or 0.62% to ₹1,44,401 per 10 grams, compared to the previous close of ₹1,45,300. The contract traded within an intraday range of ₹1,44,401 to ₹1,45,061, with open interest rising 0.62% to 9,943 lots.
What’s the News?
Fresh military exchanges between the United States and Iran have disrupted energy flows through the Strait of Hormuz, reviving inflation concerns among investors and traders. US forces conducted strikes on Iranian targets over two consecutive days, prompting retaliatory action by Tehran against American bases in the region.
The CME FedWatch Tool now shows a 64% probability of a September Federal Reserve rate increase, up sharply from around 54% a week earlier. Minutes from the Fed’s June policy meeting revealed several policymakers remain concerned about persistent inflation, reinforcing the case for tighter monetary policy ahead.
New York Fed President John Williams flagged artificial intelligence-driven demand as a factor he is closely watching among inflation drivers in the US economy, adding a fresh dimension to the central bank’s ongoing inflation assessment beyond traditional supply-side concerns.
Despite the escalation, reports suggest the US and Iran will continue peace talks, introducing some uncertainty into how sustained the current risk premium in bullion prices will prove to be over the coming weeks.
Domestically, MCX gold remained under pressure for the fourth consecutive session amid improving risk appetite in equities and a relatively stronger rupee. The August futures contract opened at ₹1,44,890 and slipped to an intraday low of ₹1,44,401, indicating persistent selling pressure in the domestic bullion market.
Silver has also come under fresh pressure in the domestic market. MCX Silver September futures declined by ₹2,677 or 1.18% to around ₹2,23,700 per kg, trading within an intraday range of ₹2,22,600 to ₹2,26,990. The weakness reflects rising Fed rate-hike expectations and improving risk sentiment in equity markets.
Market Impact Analysis
A softer US dollar, which slipped to a one-week low on Friday, has offered gold some support by making dollar-denominated bullion cheaper for buyers using other currencies, partially cushioning the metal against rate-hike-driven selling pressure this week.
However, the prospect of higher interest rates continues to raise the opportunity cost of holding non-yielding gold, a dynamic that has historically capped rallies even during periods of heightened geopolitical risk, as seen through the current pricing pattern near $4,100 to $4,130.
For Indian investors and jewellers, the stronger rupee has been the dominant force, offsetting global gains and pressuring landed bullion costs lower for four straight sessions, a trend that could affect near-term festive and wedding-season procurement decisions if it persists.
MCX Gold’s technical setup continues to remain weak. Moneycontrol’s technical indicators classify the contract as “Very Bearish,” with both moving averages and momentum indicators pointing toward continued downside pressure. The August contract is trading below its 10-day, 20-day, 50-day, and 100-day simple moving averages, signalling sustained weakness in the near term.
MCX Silver’s technical setup also remains weak, with Moneycontrol’s indicators classifying the contract as “Very Bearish.” The September contract is trading below its 10-day, 20-day, 50-day and 100-day moving averages, indicating sustained downside momentum in domestic silver prices.
Open interest in MCX Gold rose by 61 lots, or 0.62%, to 9,943 lots, indicating fresh short positioning. Similarly, silver open interest increased by 215 lots, or 1.88%, to 11,663 lots despite the price decline, suggesting traders are continuing to build bearish positions in the white metal.
Industry & Strategic Analysis
Crude oil price direction is expected to be the key swing factor for gold’s next move, since any sharp escalation in energy prices from the ongoing Hormuz disruption could intensify inflation fears and increase the probability of further rate hikes, adding fresh downward pressure on bullion.
Central bank gold reserve trends remain a structural support factor for the metal over the longer term, with the United States, Germany, Italy and India among the largest holders, even as near-term price action stays dominated by Fed policy expectations and dollar movements.
Silver has underperformed in the domestic market despite its industrial demand characteristics. Reports of import restrictions have tightened physical supplies and pushed local premiums higher, yet futures prices continue to face pressure from hawkish Fed expectations and broader risk-on sentiment in financial markets.
The coming week’s direction will likely hinge on incoming US economic data, further Fed commentary, and whether US-Iran peace talks progress or hostilities resume, with any de-escalation likely to reduce the safe-haven bid currently offering gold partial support.
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The post Gold Steadies Near ₹1,44,401 as Fed Rate-Hike Bets Rise on US-Iran Tensions; MCX Gold Falls 0.62% appeared first on Trade Brains.
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