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Gold and silver prices witnessed a strong rally on Monday, May 25, as weakness in the US dollar and a sharp decline in crude oil prices boosted investor sentiment in the precious metals market. Silver prices on the Multi Commodity Exchange (MCX) recorded a massive jump of nearly ₹4,700 per kilogram, while gold also traded firmly in both domestic and international markets.

Market experts believe hopes of easing geopolitical tensions between the United States and Iran played a major role in improving global sentiment. The possibility of reduced supply disruptions in the energy market pushed crude oil prices lower, which indirectly supported the rally in bullion prices.

Gold and Silver Shine in Global Markets

In the international market, spot gold climbed to around $4,565 per ounce during trading hours, registering a gain of more than 1% for the day. Spot silver also posted a sharp rise and traded near $78 per ounce, recording gains of over 3%.

Analysts said investors returned to safe-haven assets after the US dollar weakened against major global currencies. Precious metals generally become more attractive for foreign investors when the dollar loses strength, as buying gold and silver becomes relatively cheaper in other currencies.

Weak Dollar Supports Bullion Demand

The US Dollar Index, which measures the American currency against six major global currencies, traded lower on Monday. A weaker dollar typically increases international demand for commodities priced in dollars, including gold and silver.

According to commodity analysts, the decline in the dollar encouraged fresh buying in precious metals markets worldwide. Investors also shifted focus toward inflation trends, interest rate expectations, and geopolitical developments in West Asia.

Strong Movement in Domestic Gold and Silver Prices

Indian commodity markets also mirrored the positive global trend.

MCX Gold Futures for June delivery traded higher during the afternoon session. Around 2:15 PM, gold futures were trading nearly ₹400 higher at approximately ₹1,59,081 per 10 grams.

Silver, however, outperformed gold by a wide margin. The most actively traded silver contract on MCX surged by nearly 1.7%, or around ₹4,700 per kilogram, reaching close to ₹2,76,650 per kg.

Commodity traders noted that MCX prices usually track international market movements, and Monday’s rally was largely driven by overseas cues.

Crude Oil Falls Below $100 per Barrel

One of the biggest triggers behind the rise in bullion prices was the decline in crude oil rates.

Over the weekend, US President Donald Trump stated that a potential agreement between the United States and Iran was close to being finalized. He also indicated that the strategically important Strait of Hormuz could reopen fully in the near future.

The statement reduced fears of global energy supply disruptions and pushed crude oil prices below the $100 per barrel mark.

Lower crude oil prices generally reduce inflation concerns across economies. When inflation pressure eases, investors often shift toward gold as a safer long-term hedge, especially during periods of economic uncertainty.

Analysts See Positive Outlook for Precious Metals

Tim Waterer, Chief Market Analyst at KCM Trade, said market participants are closely monitoring developments related to Iran and the reopening of the Strait of Hormuz.

According to analysts, if tensions continue to ease and oil prices remain under pressure, inflation expectations may soften further. This scenario could continue supporting gold prices in the short term.

Experts also believe that investors are balancing two key factors simultaneously:

• Reduced geopolitical risks lowering crude oil prices
• Ongoing uncertainty in global financial markets supporting safe-haven buying

This combination has created favorable conditions for bullion markets.

Focus Shifts to New US Federal Reserve Leadership

Investors are also watching developments at the US Federal Reserve after Kevin Warsh officially took charge as the new Fed Chair, replacing Jerome Powell.

Warsh is widely viewed as a supporter of stricter monetary policies, and traders are now waiting for signals regarding future interest rate decisions.

Upcoming US GDP data, inflation reports, and Federal Reserve policy commentary are expected to influence the direction of gold and silver prices in the coming weeks.

Gold Still Below Peak Levels

Despite Monday’s strong recovery, gold prices remain significantly below the highs recorded after tensions escalated in West Asia earlier this year.

Market data suggests gold is still trading nearly 13% lower than the levels seen after geopolitical tensions intensified on February 28. This indicates that while recent buying has improved sentiment, the metal has not yet returned to its previous peak levels.

Investors Remain Cautious

Financial experts continue to advise investors to remain cautious due to volatility in global commodity and currency markets. Geopolitical developments, inflation trends, central bank policies, and crude oil prices are expected to remain key drivers for gold and silver in the near future.

Analysts also recommend that retail investors consult certified financial advisors before making investment decisions in bullion or commodity markets, especially during periods of sharp price fluctuations.