Gold, silver prices today: Key factors investors should watch amid US-Iran tensions - CNBC TV18

On November 3, gold and silver prices fell in global markets as concerns over the ongoing US-Iran tensions and the prospect of extended high interest rates in the US kept investors on edge.

In the latest trading session on COMEX, gold futures decreased by $13, settling at $3,956.60 per ounce, marking a decline of 0.33%. Similarly, silver futures fell by 0.578 to $50.310 per ounce, a drop of 1.14%.

This downturn occurred despite a rebound in crude oil prices during early trading in Asia. Brent crude futures increased by 0.5% to reach $105.25 per barrel, while US West Texas Intermediate (WTI) crude also climbed 0.5% to $96.93. The rise in oil prices followed reports of US military action against Iran's Qeshm Island, rekindling fears of escalating conflict and potential disruptions in energy supplies through the Strait of Hormuz, a critical route that historically transports about 20% of the world's crude oil and natural gas.

The situation has injected further uncertainty into commodity markets, as investors weigh the impact of rising energy prices on inflation and the future trajectory of interest rates.

Gold has been under pressure despite the geopolitical tensions, primarily due to the outlook for US monetary policy. The anticipation of higher interest rates being sustained for an extended period has dampened gold's appeal, as it does not yield interest income. Additionally, rising crude oil prices are intensifying inflation worries, which could limit the ability of central banks to reduce rates.

Satish Dondapati, a Fund Manager at Kotak Mahindra AMC, pointed out that gold has seen a nearly 3% correction in US dollar terms over the past week, reaching its lowest point in almost a year. He explained that while lower US bond yields and a weaker dollar typically support gold prices, the Federal Reserve's aggressive stance and expectations of prolonged high interest rates have kept gold under pressure.

In the previous trading session on November 2, gold and silver had managed to recover some value after a significant decline at the end of October. In New Delhi, gold prices rose by ₹500 to ₹1.42 lakh per 10 grams, boosted by festive demand from jewelers and retailers ahead of Diwali. Silver prices remained stable at ₹1.86 lakh per kg, including taxes, according to local market reports. On the international front, spot gold increased nearly 1% to $3,899.73 per ounce, and silver rose over 2% to $50.25 per ounce.

However, this recovery followed a notable correction in October, during which domestic gold prices had dropped ₹7,300 from ₹1.49 lakh per 10 grams as of September 30, while silver prices fell approximately ₹46,000 from ₹2.32 lakh per kg.

Dondapati remarked that although the recent downturn does not alter the long-term investment case for gold, particularly given that the current interest rate environment may not be sustainable indefinitely, he anticipates continued near-term pressure and volatility. He advised investors to avoid committing their full investment amount at present levels, suggesting instead that they consider staggered purchases during price declines.

Gold remains a viable option for long-term portfolios as a hedge against uncertainty and a means of diversification. For the time being, movements in crude oil prices, developments in the Middle East, and indications regarding US interest rates are crucial factors to monitor. A further increase in energy prices could exacerbate inflation concerns, while a protracted period of elevated interest rates may continue to hinder the recovery of precious metals.

Note: This article is intended for informational purposes and should not be interpreted as investment advice. Readers are encouraged to consult certified professionals before making any investment decisions.