(Kitco News) – Gold prices aren’t benefiting from lower rate hike expectations because market participants are worried about the Iran conflict, while India’s new import controls are causing 10% price premiums on domestic silver even as demand languishes, according to precious metals analysts at Heraeus.
In their latest update, the analysts noted that gold prices have remained trapped in a $250 range since the last Fed meeting.
“In the week leading up to the Federal Reserve’s latest FOMC meeting on 17 June, gold was looking as if it might have shrugged off the weakness induced by the US-Iran conflict,” they wrote. “The Memorandum of Understanding (MoU) was to be signed imminently, there had been a prolonged period of ceasefire and oil prices were falling, reducing the upward pressure on prices. This rally was relatively short-lived, as on 17 June the Fed was perceived by markets to have taken a significantly hawkish tilt. Following this, gold prices fell into the range in which they can still be found today. This range is bounded between $3,950/oz to the downside and $4,200/oz to the upside.”
The analysts said markets seem to be discounting positive economic data as they worry about the Strait of Hormuz and oil prices.
“Since the end of June, three successive price data releases, PCE, CPI and PPI, have come in under expectations, although these have failed to significantly move markets even though expectations about near-term interest rate hikes have abated,” they noted. “On the other side, the US and Iran have returned to conflict over differing interpretations on the MoU signed in June. Although this has caused oil prices to rise by ~$10/bbl, it has also led to reductions in precious metal prices but not of the same magnitude as at the start of the conflict in March. Markets are awaiting more clarity but remain range-bound for now.”
Meanwhile, lower oil prices have been shown to pass through to inflation faster than experts anticipated.
“WTI crude oil prices last dropped below $100/bbl on 21 May due to deescalation in the Middle East conflict,” the analysts wrote. “Since then, oil has continued to move lower quite consistently, the recent spike notwithstanding. Prices during the month of June were significantly lower than in May and this has begun to feed through into falling consumer prices. US consumer and producer price indices dropped 0.4% month-on-month which has boosted hopes that if the Strait of Hormuz is reopened quickly, large-scale inflation due to the conflict can be mitigated if not avoided. Headline CPI dropped from 4.2% in May to 3.5% in June, coming in lower than the expectation of 3.8%.”
“Although greater price stability is promising for precious metal prices, the headline rate remains above the Fed’s 2% target and so rate hikes this year are still expected by the markets,” they cautioned.
Spot gold continued to test both sides of the $4,000 support level on Monday morning, last trading at $4,009.76 for a loss of 0.19% on the session.
Turning to silver, Heraeus analysts noted that Indian silver premiums have risen after import restrictions tightened the domestic physical supply.
“India’s mid-May restrictions on silver imports, introduced shortly after the government raised gold and silver import duties from 6% to 15%, have created a shortage in the domestic market despite relatively weak demand,” they said. “Silver imports fell to just 1.0 moz in May, more than 90% below the 5-year average for May of 14.1 moz. Imports were further restricted in June as the rules were tightened to include silver grain and powder and with import authorisation also required.”
“The reduction in available metal has pushed Indian silver premiums to around $6.50/oz over official domestic prices, or more than 10% above benchmark prices, compared with discounts of as much as $5.50/oz in May,” the analysts wrote. “With domestic supply significantly short of demand, the import restrictions have created a tight physical market that could support further increases in local premiums.”
And Indian silver imports remained at historic lows last month as well. “India imported 1.0 moz of silver in June, down 84% from 6.3 moz in June 2025,” Heraeus noted. “This drop reflects the continued impact of recent import restrictions and duties designed to prop up the rupee. India is a crucial region for global silver demand with imports totalling 210 moz in 2025, accounting for roughly 18% of global silver demand.”
Silver prices are outperforming on Monday morning as they attempt to reclaim the $57 per ounce level.
Spot silver last traded at $56.962 per ounce for a gain of 1.90% on the daily chart.
