Silver Futures Tumble Amid Strong US Dollar & US-Iran Tensions

New Delhi, Jul 13 (PTI) Silver futures tumbled by Rs 3,783 to Rs 2.18 lakh per kilogram on Monday as the fresh escalation in the US-Iran conflict drove oil prices higher and boosted the dollar.

On the Multi Commodity Exchange, silver for September delivery declined by Rs 3,783, or 1.7 per cent, to Rs 2,18,881 per kg in a business turnover of 11,733 lots.

The metal plunged Rs 14,746, or 6.2 per cent, to settle at Rs 2.22 lakh per kg over the past week.

Traders said that higher energy prices could stoke inflation and keep US interest rates elevated, which prompted investors to trim exposure to precious metals.

"Silver prices declined sharply on Monday as rising crude oil rates, a stronger US dollar, and higher Treasury bond yields reduced the appeal of bullion," said Gaurav Garg, Research Analyst at Lemonn Markets Desk.


He said oil prices surged as renewed military exchanges between the US and Iran fuelled concerns over disruptions to crude supplies through the Strait of Hormuz, intensifying inflation worries.

"Despite the weakness in prices, investor appetite for silver remained firm, with exchange-traded funds (ETFs) attracting a record Rs 4,286 crore in inflows during June," Pinky Yadav, Commodity Fundamental Analyst at Choice Broking, said.

In the international markets, Comex silver futures for September delivery fell USD 1.68, or 3 per cent, to USD 58.47 per ounce in New York.

"Silver futures slipped below USD 60 per ounce in the global markets as rising crude oil prices and escalating US-Iran tensions strengthened expectations that the Federal Reserve will keep interest rates higher for longer," brokerage firm Axis Securities said.

According to Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, Brent crude hovered near USD 79 per barrel, and WTI traded above USD 74 after fresh exchanges between Washington and Tehran clouded prospects for restoring normal tanker traffic through the Strait of Hormuz.

Analysts said market participants are awaiting speeches by Federal Reserve officials, including Michelle Bowman and Christopher Waller, for fresh signals on the US monetary policy outlook, which could provide the next catalyst for bullion.