Gold holds above $4,000 an ounce, silver edges higher: What may drive prices next
COMEX gold rose 0.34% to $4,029.60 an ounce after touching an intraday high of $4,041 an ounce, while COMEX silver gained 0.13% to $57.145 an ounce.
The precious metals market is balancing two competing factors. On one hand, ongoing tensions in the West Asia continue to support demand for safe-haven assets such as gold. On the other, higher crude oil prices are fuelling inflation concerns, strengthening expectations that the US Federal Reserve could raise interest rates again later this year.
Why oil matters for gold
Oil prices eased slightly on Tuesday (July 21) after reports of mediation efforts between the US and Iran raised hopes of a temporary ceasefire. Brent crude slipped 0.4% to $88.87 a barrel, while US WTI crude traded near $82.47.
However, geopolitical risks remain elevated after Yemen’s Iran-backed Houthis threatened a naval blockade of Saudi Arabia, raising concerns about potential disruptions to global energy supplies. Fresh military strikes between the US and Iran have also kept markets on edge.
Higher crude prices can increase inflationary pressures. If inflation remains elevated, the Federal Reserve may keep interest rates higher for longer or even raise rates again, a scenario that typically weighs on non-interest-bearing assets such as gold.
Fed expectations cap bullion gains
According to Kaynat Chainwala, AVP, Commodity Research at Kotak Securities, spot gold is holding near $4,020 an ounce while silver has recovered above $57 an ounce, but the upside remains limited as markets have largely priced in at least one more Federal Reserve rate hike by the end of the year.
She said hawkish comments from US policymakers and the recent rally in oil prices have pushed expectations of a September rate hike higher, reducing the appeal of bullion despite intermittent support from geopolitical developments.
What analysts are watching
Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, said gold has recovered, aided by softer US inflation data.
However, he noted that concerns over rising crude oil prices, a firm US dollar and expectations of another Fed rate hike continue to cap gains. On the domestic market, he sees ₹1.40 lakh per 10 grams as immediate support for MCX gold, while ₹1.42 lakh per 10 grams could act as a key resistance level over the coming sessions.
Silver, meanwhile, has shown greater resilience after recovering from recent lows, although both precious metals remain sensitive to developments in global oil markets, the West Asia conflict and expectations around US monetary policy.
