Gold and silver prices surged sharply on India's Multi Commodity Exchange (MCX) over a three-day period, driven by safe-haven demand ahead of key US inflation data and growing geopolitical uncertainty.

Silver gained more than 7% over the three-day window, while gold rose over 4%. In absolute terms, gold prices climbed approximately Rs 6,600 per 10 grams, and silver jumped roughly Rs 16,200 per kilogram.

The rally came as investors positioned themselves ahead of the release of US inflation figures, which are widely watched for their influence on Federal Reserve monetary policy decisions. Expectations surrounding the Fed's interest rate trajectory have historically affected non-yielding assets such as gold and silver, as lower interest rates tend to reduce the opportunity cost of holding precious metals. The upcoming Consumer Price Index (CPI) report is among the most closely tracked inflation indicators by financial markets, as it directly informs the Fed's assessment of whether price pressures are cooling sufficiently to justify rate cuts.

Geopolitical tensions and uncertainty surrounding the Strait of Hormuz further bolstered safe-haven demand for bullion. The Strait of Hormuz, a narrow chokepoint between the Persian Gulf and the Gulf of Oman, is one of the world's most critical oil shipping routes through which roughly a fifth of global oil consumption transits. Disruptions or threats in the region have consistently driven investors toward traditional safe-haven assets.

The MCX, headquartered in Mumbai, is India's largest commodity derivatives exchange and serves as the primary platform for trading gold and silver futures and options in the country. India is also one of the world's largest consumers of physical gold, supported by deep-rooted cultural and jewelry demand, which means that domestic price movements carry broad significance for retail buyers, jewelers, and importers. Price movements on the MCX typically track international precious metals benchmarks, which are denominated in US dollars and traded on global exchanges such as the COMEX division of the Chicago Mercantile Exchange (CME). Consequently, rupee-dollar exchange rate fluctuations also factor into MCX pricing, as a weaker rupee makes dollar-denominated imports more expensive for Indian buyers.

Globally, gold is widely regarded as a store of value during periods of economic and political uncertainty, while silver — which carries both precious-metal and industrial-demand characteristics, including growing use in solar photovoltaic manufacturing and electronics — often experiences sharper percentage moves than gold during commodity rallies.

Source: Economic Times Markets