Whalesbook
Futures Tumble on Geopolitical Worries
Gold and silver futures fell across major exchanges as geopolitical tensions rose. On India's MCX, gold futures settled at Rs 1,38,265 per 10 grams, down 0.71%. Silver futures dropped 2.61% to Rs 2,19,300 per kilogram. International COMEX gold futures also declined, down 0.68% to $4,377.4 per troy ounce, while silver futures fell 1.19% to $68.530 per troy ounce. This broad futures weakness comes as Iran denied holding talks with the U.S. to de-escalate conflict, impacting market sentiment after a brief rebound on news of postponed U.S. strikes.
ETFs Show Strength Despite Futures Drop
In contrast, gold and silver Exchange Traded Funds (ETFs) showed significant strength. Silver ETFs like UTI Silver ETF and SBI Silver ETF climbed 7.52% and 7.02%, respectively. Gold ETFs also saw gains, with Axis Gold ETF rising 4.15% and HDFC Gold ETF up 3.45%. This strong ETF performance indicates investors may be seeking the safety of physical precious metals via managed funds, even as futures react to immediate geopolitical news. This disconnect suggests different investor approaches, with ETF inflows potentially reflecting longer-term views compared to futures traders responding to short-term volatility.
Inflation Fears and Macro Factors Weigh on Futures
However, factors like persistent inflation concerns and evolving economic conditions are weighing on futures. Jigar Trivedi, Senior Research Analyst at Indusind Securities, pointed out that geopolitical talks and potential disruption of the Strait of Hormuz are increasing inflation risks, pushing gold towards $4,300 an ounce. Historically, high energy prices have led to inflation worries, often prompting expectations of interest rate hikes, which can hurt assets like gold that don't pay interest. The Federal Reserve's policy outlook for 2026 is a key focus, but sustained higher inflation could make gold less attractive compared to assets that offer yields. The U.S. Dollar Index also showed strength, potentially capping gold's gains. Meanwhile, platinum and palladium futures traded mixed, indicating specific factors might be influencing those metals differently.
Market Outlook and Analyst Views
Looking forward, MCX Gold April futures may continue to fall, with some analysts targeting Rs 137,500 per 10 grams, given the current global market sentiment. Precious metal prices will likely remain sensitive to Middle East developments and central bank policy signals. The difference between futures and ETF performance needs watching, as it could indicate changes in investor demand. While short-term volatility continues due to geopolitical events, steady ETF inflows might support prices long-term, depending on overall economic trends and the 2026 inflation outlook.