The white–metal rate rose sharply on the Multi Commodity Exchange of India (MCX) on June 22 as optimism grew following progress in peace talks between the United States and Iran.
By 11:13 am on Monday, the MCX silver July futures contract was up 1.94%, or ₹4,525, to ₹2,37,710 per kg. The MCX gold July futures rose 0.72%, or ₹1,039, to ₹1,46,260 per 10 grams. The jump in gold and other precious metals is a result of easing geopolitical tensions in the Middle East.
The latest rally comes after the first round of high-level talks between the US and Iran in Burgenstock, Switzerland, under the Islamabad Memorandum of Understanding (MoU) took place Sunday. Qatar and Pakistan have formed a High Level Committee to oversee talks moving forward, a step forward in peace talks.
Qatar and Pakistan said in a joint statement that discussions were conducted in a “positive and constructive atmosphere.” They also said they have made progress in establishing a mechanism for further technical talks which would prepare the way for concrete agreements to be made in the coming weeks.
Market analysts believe that easing of tension would reduce global energy trade risks and especially in the Middle East, a region that has long been a flashpoint for supply disruption in crude oil. Investors tend to gravitate towards precious metals as safe-haven assets when there is less geopolitical risk around them and hence why the price of silver and gold are up today.
Silver has enjoyed a stronger rally than gold as it is both a precious and industrial metal, and has a high demand base because it is also a precious metal in its own right. Now that global industries are increasingly reliant on silver for electronics, solar panels and electric vehicles, any geopolitical stability in terms of smooth trade flows tends to enhance demand expectations.
Gold, by contrast, is still a classic hedge against uncertainty. So that gold futures are generally rising slowly and steadily reflects investors’ belief that peace talks could stabilize markets without making safe-haven investment mandatory.
Finally, the progress in the US–Iran peace talks has given investors a much-needed boost with silver and gold prices climbing on the MCX. With mediators Qatar and Pakistan holding a very structured dialogue and the price of gold rising, there is still good news for precious metals as there will be more talks soon.
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