Hormuz Tensions Stifle Gold Rally as Indian Silver Premiums Surge

Gold prices have struggled to break out of a $250 band since the mid-June Federal Reserve meeting. Although recent consumer and producer price index releases fell below expectations—typically a signal for potential gains—market participants remain preoccupied with escalating tensions between the U.S. and Iran. Analysts at Heraeus report that while the renewed conflict has driven oil prices up by approximately $10 per barrel, the resulting impact on precious metals remains more muted than the initial shock seen in March.

Despite the Fed's hawkish tone, inflation figures have begun to moderate, with headline CPI dropping to 3.5% in June. However, because this remains above the central bank’s 2% target, the market continues to price in rate hikes for the remainder of the year. Spot gold hovered near $4,009.76 on Monday, reflecting a cautious wait-and-see approach among traders.

In the physical market, India’s regulatory landscape has created a supply bottleneck for silver. New import duties, raised from 6% to 15% earlier this year, combined with strict authorization requirements for silver grain and powder, have slashed imports to historic lows. Imports plummeted to 1.0 million ounces in June, a sharp decline from the 6.3 million ounces recorded during the same period in 2025. This scarcity has pushed local Indian premiums to $6.50 per ounce over benchmark prices. Spot silver, meanwhile, showed more resilience than gold on Monday, trading at $56.96 per ounce.