The yellow metal rose sharply in the Multi Commodity Exchange of India (MCX) on June 15 after a significant geopolitical breakthrough. Crude oil prices fell as the United States and Iran struck a peace deal to open the Strait of Hormuz and relieve global tension.
At 9:34 a.m. on Thursday, the MCX gold July futures contract was up 1.69 percent or ₹2,500 to ₹1,51,237 per 10 grams. The MCX silver July futures were up 2.54 percent or ₹6,261 to ₹2,52,447 per kg. Investor appetite for precious metals rose as the energy market receded.
The rally has come after Trump announced a peace deal with Iran after a four-month-long dispute. He said the U.S. had lifted its blockade from the Strait of Hormuz, the vital maritime transit point for the international energy trade that was shut down during the tensions. Opening this chokepoint will rekindle the flow of oil in the world.
The global markets quickly reacted. Gold prices rose by about 3 percent to $4,346 an ounce and silver by about 4 percent to $70.5 an ounce. The lower geopolitical risk of crude oil and the rise in gold prices encouraged investors to buy precious metals as a hedge against risk.
The developments signal the turning point in commodities trading for commodities traders. With oil prices cooling, inflationary pressures may ease and central banks can now keep interest rates stable. The rise in MCX prices for the country where gold is in such high demand is a signal that geopolitical events are all connected globally and also in India.
So the surge in gold and silver prices on June 15 is evidence of both relief in global energy markets and the resumption of optimism for precious metals. The US-Iran peace deal opened a way for trade and investor sentiment and put gold and silver at the center of the financial market.
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