DBT Bureau
Pune, 25 May 2026
Commodity markets ended lower as investors assessed hawkish US Federal Reserve commentary, developments in US-Iran negotiations, and shifting global demand trends. Gold and silver weakened due to a stronger US dollar and rising rate-hike expectations, while crude oil declined as hopes for diplomatic progress with Iran eased supply concerns.
Gold prices settled lower by 0.58% at ₹158,679 as a stronger US dollar and rising crude oil prices increased inflation concerns and reinforced expectations of tighter monetary policy from the Federal Reserve. Market sentiment weakened after Federal Reserve Governor Christopher Waller stated that the central bank should remove its easing bias from policy guidance and remain prepared for a possible rate hike if inflation continues to stay above the Fed’s 2% target. Minutes from the latest Federal Reserve meeting also indicated that most policymakers still consider another rate increase possible later this year if inflationary pressures persist. Geopolitical developments surrounding US-Iran negotiations continued to influence safe-haven sentiment. Although Tehran indicated that the latest US proposal had narrowed differences between the two sides, reports that Iran’s Supreme Leader ordered the country’s enriched uranium stockpile to remain within national borders complicated the peace process and kept uncertainty elevated. Higher crude oil prices linked to Middle East tensions also strengthened inflation expectations globally. Fundamentally, central bank demand for gold remained a strong supportive factor. Goldman Sachs revised its estimate of official gold purchases sharply higher and now expects central banks to buy nearly 60 tonnes per month through 2026 amid ongoing reserve diversification. Meanwhile, the World Gold Council reported that India’s investment demand for gold surged 52% year-on-year during the March quarter, overtaking jewellery consumption for the first time on record. Global gold demand also rose 2% in the first quarter as stronger investment and central bank buying offset weaker jewellery demand. Physical demand in India remained subdued due to high import duties and price volatility, although discounts narrowed from record levels seen previously. Technically, the market is witnessing long liquidation as open interest declined 3.47% to 5,598 lots while prices fell by 927 rupees. Gold is holding support at ₹158,020, with further downside likely towards ₹157,365, while resistance is seen at ₹159,415 and ₹160,155 levels.
Market analysis:
- Gold trading range for the day is ₹157365-₹160155.
- Gold pulled lower by a firmer dollar and rising oil prices that kept inflation concerns in focus.
- Fed’s Waller said Fed should axe the “easing bias” from its policy statement and effectively open the door to a possible rate hike.
- Gold kept trading at a steep discount in India, as price volatility dampened demand, while premiums eased in China.
Silver prices settled lower by 1.1% at ₹271,846 as investors remained cautious amid ongoing diplomatic discussions between the United States and Iran regarding a possible resolution to the Middle East conflict. Market sentiment was further pressured by hawkish comments from Federal Reserve officials and a stronger US dollar, which reduced the appeal of non-yielding assets. Richmond Federal Reserve President Thomas Barkin stated that current monetary policy remains appropriately positioned to respond to economic shocks, while emphasizing concerns over inflation and economic growth risks. According to CME FedWatch data, traders are currently pricing in a 58% probability of at least one 25 basis-point US interest rate hike by December. Economic sentiment indicators from the United States also reflected growing uncertainty. The University of Michigan Consumer Sentiment Index dropped sharply to a record low of 44.8 in May, marking the third consecutive monthly decline as elevated gasoline prices linked to disruptions in the Strait of Hormuz continued to weigh on consumer confidence and inflation expectations. Despite weaker prices, physical silver demand from China remained exceptionally strong. China imported nearly 836 metric tonnes of silver during March, almost triple the historical seasonal average, driven by strong retail investment demand and aggressive stockpiling by photovoltaic manufacturers ahead of export tax changes. Strong domestic premiums in China also encouraged global shipments into the country through arbitrage opportunities. Meanwhile, India imposed restrictions on silver imports across most forms to curb excessive inflows and ease pressure on the rupee. The restrictions are expected to tighten domestic supplies and potentially support local premiums despite lower global demand. India’s silver imports had surged sharply over the past year, supported mainly by investment demand and record ETF inflows. Technically, the market is witnessing fresh selling pressure as open interest increased 3.03% to 9,476 lots while prices declined by 3,037 rupees. Silver is holding support at ₹269,155, with further downside possible towards ₹266,465, while resistance is seen at ₹274,880 and ₹277,915 levels.
Market analysis:
- Silver trading range for the day is ₹266465-₹277915.
- Silver dropped as investors cautiously monitor ongoing diplomatic efforts between the United States and Iran to reach a deal.
- Fed’s Barkin said that current policy is “in a good place to respond to ongoing shocks
- CME FedWatch predicts 58% chance of at least one U.S. rate hike this year
Crude oil prices settled lower by 1.86% at ₹9,168 as renewed optimism surrounding diplomatic negotiations between the United States and Iran eased immediate supply disruption concerns. Market sentiment improved after US Secretary of State Marco Rubio stated that there had been slight progress in mediated talks with Iran, while Tehran continued reviewing the latest US proposal delivered through Pakistan. Despite the improving diplomatic tone, uncertainty remains elevated regarding the final outcome of negotiations and the possible reopening of the Strait of Hormuz, keeping market volatility high. Additional pressure came from expectations that major OPEC+ producers could agree to a modest increase in July output during their upcoming June 7 meeting, although several member countries continue facing operational disruptions linked to the ongoing Middle East conflict. China’s refined fuel exports are also expected to increase slightly in June as the country balances export demand with domestic consumption needs. Fundamentally, US inventory data remained supportive despite the market decline. According to the Energy Information Administration, US crude oil inventories declined sharply by 7.9 million barrels last week, significantly exceeding expectations for a 2.9 million-barrel draw. Crude inventories at the Cushing delivery hub also declined by 1.6 million barrels, while gasoline stocks fell by 1.5 million barrels. However, distillate inventories unexpectedly increased, limiting bullish momentum. OPEC also lowered its 2026 global oil demand growth forecast to 1.17 million barrels per day from 1.38 million previously due to the economic impact of the Iran conflict, although the group expects demand growth to improve during 2027. Barclays maintained its 2026 Brent crude forecast at $100 per barrel, highlighting continued concerns over tight global inventory levels and supply deficits. Technically, the market is witnessing fresh selling pressure as open interest increased 5.24% to ₹14,972 lots while prices declined by 174 rupees. Crude oil is holding support at ₹8,963, with further downside possible towards ₹8,758, while resistance is seen at ₹9,464 and ₹9,760 levels.
Market analysis:
- Crudeoil trading range for the day is ₹8758-₹9760.
- Crude oil dropped as renewed hopes emerged that the US and Iran could reach a diplomatic agreement.
- US Secretary of State Marco Rubio said there had been “slight progress” in mediated talks with Iran.
- Barclays is maintaining its 2026 average Brent crude oil price forecast at $100 a barrel though risks are skewing higher.
Source: Kedia Advisory
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