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Precious metals are expected to remain volatile and trade within a range as uncertainty over the fragile US-Iran truce continues to cloud the outlook for crude oil prices, according to market and commodities experts.
Crude oil prices fell sharply after the ceasefire announcement, with Brent crude dropping below USD 90 per barrel and US crude slipping close to USD 80 in early trade on Monday. However, prices later recovered. At the time of reporting, Brent crude was trading at around USD 91.93 per barrel, while US crude stood at USD 84.77 per barrel. Despite Monday's decline, Brent crude remains over 20 per cent higher so far this month. Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, said the market viewed the truce as the first meaningful step towards easing tensions after two weeks of conflict. "Markets have taken this as the first genuine step towards de-escalation in two weeks. The important caveat, however, is that this is a pause, not a deal -- and the physical oil market has not improved at all," he said. He added, "What has fallen is the risk premium, not the disruption -- which means the market is vulnerable to a sharp snapback if the truce frays." According to Banerjee, Brent crude has key support at USD 89-90 per barrel, while USD 92-95 is the immediate trading range. A move above USD 101 would signal a return of the uptrend. For WTI crude, support lies at USD 84-86 and resistance at USD 92. Banerjee said softer oil prices have eased inflation concerns, weakening the US dollar and bond yields, which has supported precious metals. Gold was trading at around USD 4,088.83 per ounce at the time of reporting. He said gold is expected to remain in the USD 3,950-4,200 range. "The bears still hold the advantage, though downside momentum has visibly weakened now that buyers have defended USD 3,950, and only a move above USD 4,200 would confirm the trend has turned from down to up," he said. Silver is also expected to remain range-bound between USD 55.50 and USD 63.20, with Banerjee saying it is likely to remain more volatile than gold because of its exposure to risk sentiment and industrial demand. Manav Modi, Commodities Analyst at Motilal Oswal Financial Services Ltd, said softer oil prices reduced near-term inflation concerns, while a weaker US dollar made bullion more attractive for overseas buyers despite fresh US tariffs on imports from several trading partners. He added that investors will closely watch upcoming US inflation and labour market data, with the US Federal Reserve's policy decision expected to be the key driver for gold prices in the near term. Manoranjan Sharma, Chief Economist at Infomerics Valuation and Rating Limited, said Brent crude could ease further if global supply continues to outpace demand, with prices potentially falling to the USD 70-80 per barrel range by late 2026 or 2027. "For the rupee, lower crude prices translate into reduced import payments, lower dollar demand and a potentially narrower current account deficit. A sustained price environment below USD 80 per barrel would also help contain imported inflation and ease pressure on monetary policy, although global risk aversion could limit currency gains. Equity markets, too, could benefit. However, the outlook remains vulnerable to renewed geopolitical tensions and a sharp slowdown in global growth." Sharma said. (ANI)
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