Gold and silver closed the week trading weak with a negative bias. The dominant macro narrative centred on the evolving US–Iran conflict and firmer US inflation data, which together kept bullion on the defensive. While easing geopolitical risk premia weighed on safe-haven demand, a softer dollar and sub-target monthly PCE prints lent partial support, leaving prices range-bound with a cautiously constructive undertone heading into a catalyst-heavy first week of June.

Geopolitics: US–Iran Ceasefire Progress

Reports indicate the US and Iran may extend their ceasefire, with a tentative 60-day extension reportedly agreed to enable formal nuclear talks — though President Trump had yet to approve the terms. Despite the optimism, continued disruptions to shipping and energy infrastructure kept oil prices elevated, reinforcing a cautious Federal Reserve stance. Global oil prices nonetheless tumbled roughly 20% from their 2026 highs as investors grew increasingly confident in a durable deal that would reopen shipping through the Strait of Hormuz. A de-escalation removes a key risk premium that had underpinned bullion.

US Inflation and the Fed

Thursday’s PCE data showed both headline and core monthly inflation came in below expectations, though annual readings remained well above the Fed’s target at 3.8% (headline) and 3.3% (core). May figures captured the fastest pace of price gains in three years during April, reinforcing expectations that the Fed holds rates unchanged well into 2027. This persistent higher-for-longer environment remains a structural headwind for non-yielding bullion. Markets price the federal funds rate steady through year-end, yet still assign roughly a 46% probability to a December rate hike.

Currencies: Dollar and Rupee

The DXY hovered near 99 through the week, as reports of a tentative US–Iran peace agreement eased concerns over inflation and future rate hikes; the softer dollar offered partial support to gold. The rupee strengthened materially, with USDINR appreciating from 97 to 95 over two weeks to three-week highs, as sustained Reserve Bank of India intervention bolstered currency confidence. Attention now turns to the RBI’s June 5 policy decision, where most economists polled by Reuters expect the key rate to be held unchanged at 5.25%.

Silver Dynamics

Silver suffered a sharper intraweek correction than gold, reflecting its dual sensitivity to macro rate expectations and industrial demand. Gold posted a modest 0.8% monthly decline, pressured by inflation concerns and the prospect of prolonged elevated rates. For silver, a structural supply deficit alongside green-energy demand from solar and electric vehicles remains intact, providing durable medium-term support beneath the metal even as near-term volatility persists.

Outlook and Sentiment

Cautiously bullish. Ceasefire progress, a weaker DXY, and sub-target monthly PCE are constructive, but persistent above-target annual inflation and a Fed firmly on hold cap near-term upside. The next major catalysts to watch are Trump’s approval of the Iran deal terms and the US jobs report on June 6.