Gold, silver futures rebound as value buying lifts bullion prices

Gold and silver futures recovered strongly on Thursday after value buying emerged following the recent correction, helping both precious metals snap their losing streak despite lingering geopolitical tensions in West Asia.

On the MCX, gold futures for August delivery rose ₹1,038, or 0.72%, to settle at ₹1,44,749 per 10 grams, with a business turnover of 10,018 lots.  The contract had opened lower before bargain hunting at reduced levels supported a broad recovery.

Traders said a weaker US dollar also improved sentiment, making gold more attractive to investors. However, gains remained limited as renewed tensions between the US and Iran reinforced expectations that the US Federal Reserve could maintain higher interest rates for longer.

"However, prices were capped on the upside as renewed US-Iran tensions fuelled inflation concerns, strengthening expectations that the US Fed could keep interest rates higher for longer," said Gaurav Garg, Research Analyst at Lemonn Markets Desk. In overseas trade, Comex gold futures for August advanced 1% to $4,118.84 per ounce, recovering above the US$4,100 mark after recent selling pressure eased.Silver futures also staged a sharp rebound. 

The most-active September contract on the MCX climbed ₹3,841, or nearly 2%, to ₹2,27,278 per kg, with turnover reaching 11,186 lots. Analysts attributed the recovery to value buying after the recent decline and supportive global market cues. 

However, investor sentiment remained cautious after US President Donald Trump indicated that the interim peace agreement with Iran was effectively no longer in force, keeping geopolitical risks elevated.

Pinky Yadav, Commodity Fundamental Analyst at Choice Broking, said India's silver imports declined sharply in May following import restrictions, tightening domestic supplies and pushing local premiums to a six-month high. 

She added that weaker imports could reduce India's trade deficit and lend support to the rupee, although they may weigh on international silver prices. Meanwhile, Comex silver futures for September delivery gained more than 2% to US$59.73 per ounce.

Market participants are now watching developments in the Washington-Tehran conflict, upcoming US economic data and comments from Fed officials for fresh direction on bullion prices.