Gold prices on the Multi Commodity Exchange (MCX) have slipped nearly 4 per cent during this week as tensions eased between Iran and Israel, and the US Federal Reserve signals no rush to cut interest rates.
On Friday, June 27, MCX Gold August futures fell as much as 1.16 per cent to touch an intraday low of Rs 95,955 per 10 grams on Friday, June 27. In global markets, COMEX Gold August Futures fell up to 1.42 per cent to hit an intraday low of $3,330.4 an ounce.
Easing Iran-Israel Tensions
The 12-day conflict between Iran and Israel ended on June 24 after a ceasefire was brokered by former US President Donald Trump. While there have been a few minor violations since tensions have largely eased.
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Israel’s Prime Minister Benjamin Netanyahu maintained that Israel had successfully disrupted Iran’s nuclear ambitions and warned of tough action if new threats emerge. On the other side, Iran continued to deny it was pursuing nuclear weapons but agreed to stop retaliatory attacks as long as Israel ended its airstrikes.
The easing of the tensions in West Asia reduced the demand for safe haven, putting pressure on gold prices.
Adding to that, Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, said the Federal Reserve’s decision to hold off on rate cuts kept investor sentiment in check.
Speaking before a US Senate panel on June 25, Federal Reserve Chair Jerome Powell said the Federal Reserve is not rushing to cut interest rates amid ongoing trade-related uncertainties but noted that rate easing could come sooner if inflation remains contained.
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Gold Outlook
Trivedi said that while the broader outlook for gold remains positive amid lingering geopolitical and economic uncertainties, gains in domestic prices have been capped by the rupee’s recent appreciation. He added that market participants are now closely watching the upcoming US Core Personal Consumption Expenditures (PCE) Price Index, which is a key inflation indicator that could shape the Fed’s next move.
The US Bureau of Economic Analysis (BEA) is set to release the PCE data for May 2025 later today. The PCE index tracks how much American households are spending on goods and services. It offers insights into consumer habits and inflation trends.
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Gold is getting some support from a weaker dollar and falling US Treasury yields, according to Kaynat Chainwala, AVP–Commodity Research at Kotak Securities. She pointed out that reports of Donald Trump possibly replacing Fed Chair Jerome Powell as early as September or October have raised hopes of an interest rate cut in the US, which is helping gold hold ground. Chainwala added that traders are now keeping a close eye on upcoming US data, like GDP numbers, jobless claims, and comments from Fed officials, for more clarity on the rate outlook.
