KKN Gurugram Desk | On May 16, 2025, both gold and silver prices witnessed a notable decline on the Multi Commodity Exchange (MCX). The drop in precious metal prices is being linked to the recent easing of geopolitical tensions between India and Pakistan, which has led to a correction in safe-haven buying.

This shift in sentiment has not only impacted investor psychology but also driven significant adjustments in commodity trading trends, especially for June and July futures contracts.

Key Highlights

• Gold (5 June 2025 delivery) fell by 1.11%, settling at ₹92,135 per 10 grams on MCX.

• Silver (4 July 2025 delivery) declined by 1.13%, trading at ₹94,828 per kilogram.

• The fall in prices correlates with a reduction in cross-border tension between India and Pakistan.

• Analysts forecast that further geopolitical calm and a strengthening rupee could continue pressuring bullion prices in the near term.

Gold Futures: June 5 Contract Slips by Over 1%

The June 5, 2025, gold futures contract experienced a significant downward adjustment. At the close of trade on Friday, gold was priced at ₹92,135 per 10 grams, marking a 1.11% decrease compared to the previous session.

This movement suggests that investors are retreating from safe-haven assets, opting instead for risk-on strategies in equities or real estate. The cooling of geopolitical tensions, especially in South Asia, is a primary driver behind this retreat.

Factors Affecting Gold Prices Today

1. Easing India-Pakistan Tensions
   Recent diplomatic engagements have calmed the decades-long hostility between the two nuclear neighbors. As tensions reduce, investor appetite for gold—typically a geopolitical hedge—has weakened.

2. Global Gold Spot Prices
   Internationally, spot gold was trading marginally lower at $2,354 per ounce. The strengthening of the US Dollar Index (DXY) has also added downward pressure to gold prices globally.

3. Interest Rate Speculations
   The US Federal Reserve’s stance on maintaining higher interest rates for longer is deterring gold buying, as yields on government bonds become more attractive.

4. Rupee Movement
   A marginal appreciation in the Indian rupee against the US dollar made gold imports slightly cheaper, further contributing to lower MCX pricing.

Silver Futures: July 4 Contract Down by 1.13%

Silver also followed gold’s downward trajectory. The 4 July 2025 delivery contract on MCX dropped by 1.13%, with the price settling at ₹94,828 per kilogram.

While silver is often influenced by industrial demand, it also tends to track gold closely during volatile periods. As risk sentiment improved globally, especially in Asia, the demand for silver as a safe-haven asset weakened.

Market Drivers for Silver’s Decline

• Reduced geopolitical risk across the Indian subcontinent

• Lower speculative demand from retail and institutional traders

• No fresh buying trigger in industrial metals this week

• Tracking global silver rates, which saw a mild correction in London and New York

Investor Sentiment and Safe-Haven Assets

Precious metals like gold and silver are often termed “safe-haven assets” because they tend to retain or increase value during times of economic or political uncertainty.

In recent weeks, with heightened India-Pakistan tension, traders took bullish positions in gold and silver. Now, as diplomatic efforts bear fruit and regional dialogue resumes, these positions are being unwound, contributing to price corrections on MCX.

Expert Opinion: What Analysts Are Saying

Anil Kumar, Senior Commodity Analyst, Delhi Commodity Exchange:

“The easing of tensions between India and Pakistan has reduced the urgency for investors to seek shelter in bullion. This, combined with a stable rupee and lack of fresh global triggers, has led to a modest correction in gold and silver.”

Sonia Mehta, Metals Strategist, Global Comtrade:

“Silver’s fall is not surprising. In the absence of strong industrial demand, it continues to mirror gold’s movement. Technically, gold may test ₹91,500 in the short term if the current sentiment persists.”

International Perspective: How Global Markets Are Reacting

In the international markets:

• Spot gold was down by 0.6%, trading near $2,354/oz

• Spot silver dipped by 0.4%, reaching $28.75/oz

• COMEX Gold Futures for June also showed a similar downtrend

• Asian stock markets rallied after easing South Asian tensions, increasing the risk appetite

This trend demonstrates a global de-escalation in fear-driven trades, pushing investors towards equities and higher-yielding instruments.

Price Chart Snapshot: MCX Gold & Silver (17 May 2025)

Outlook: What to Expect in the Coming Days

Traders and investors can expect the following trends in the near term:

Bullion Market Forecast

• Sideways to Bearish movement in gold and silver

• Key support for gold seen at ₹91,000/10g, resistance near ₹93,500

• Silver expected to remain between ₹93,000 to ₹96,500/kg

• If geopolitical calm continues, bullion may further consolidate or decline

Domestic Factors to Watch

• Import Duty Adjustments: Any change could impact gold’s retail pricing

• Monsoon Progress: A good monsoon may divert investment from gold to agri-stocks

• Inflation Trends: Lower inflation could reduce safe-haven buying further

Impact on Jewelers and Retail Market

The fall in MCX prices may soon reflect in retail gold rates, especially in urban markets like Delhi, Mumbai, Chennai, and Kolkata. Jewelers may also see higher footfall from buyers waiting for a price correction before wedding season purchases.

The latest price drop in gold and silver on MCX is a direct consequence of the easing geopolitical scenario in South Asia. With India and Pakistan dialing down recent escalations, investors are temporarily stepping away from bullion, favoring riskier assets like equities.

However, market watchers caution that any resurgence in geopolitical instability, global rate changes, or inflation surprises could reignite safe-haven demand.