Precious metals posted one of their sharpest weekly corrections in recent months, driven primarily by a stronger-than-expected US employment report that reset rate expectations and drove the dollar sharply higher towards the 100 mark. Spot gold fell to its lowest level of 2026, declining more than 4% on the week, while silver underperformed materially — dropping 9% on June 5 alone and closing the week 7% lower.
The week’s dominant catalyst was Friday’s May Non-Farm Payrolls print of 172,000 — more than double the 85,000 consensus estimate — with prior months revised upward by a net 93,000. The data propelled the US Dollar Index through the 100 handle for the first time in eight weeks, from approximately 99.20. The unemployment rate held at 4.3%, with leisure and hospitality and local government contributing 73% of net hiring. Following 75 basis points of cumulative rate cuts in late 2025, the Fed has been on hold, and the above-consensus labour data reinforces that pause. CME FedWatch now prices a 72% probability of a rate hike before year-end.
Geopolitical risk provided some early-week support for gold, before being overtaken by macro repricing. US–Iran diplomatic talks made no substantive progress, per Iranian Foreign Minister Araghchi, despite President Trump characterising negotiations as nearing conclusion. Separately, an Israel–Hezbollah partial ceasefire broke down quickly, with fresh rocket attacks reported on June 3, the first since June 1.
On the structural demand side, WGC Q1 2026 data shows gold-backed ETF inflows of 62 tonnes — positive but well below Q1 2025’s 230 tonnes, following March outflows from US funds. US-listed gold ETFs reported net April inflows of $0.83 billion, narrowing year-to-date outflows to $1.5 billion. Central bank gold purchases reached 244 tonnes net in Q1, up 3% year-on-year. India recorded 12 consecutive months of gold ETF inflows, and Chinese accumulation continues to underpin the market on pullbacks, reinforcing $4,000/oz as a structural floor. The Silver Institute forecasts a 20% increase in physical silver investment in 2026 to 227 million ounces — the highest since 2022 — against a persistent supply deficit, with India and the US the two largest physical silver investment markets globally.
The Indian rupee approaches 95 mark following a package of RBI measures designed to attract dollar inflows, amid pressure from elevated crude prices and record equity outflows. The RBI held its policy rate steady but revised its growth forecast lower and its inflation projection higher. Dollar inflow measures announced include: capital gains tax exemption for FIIs on government bond receipts; inclusion of new 15-, 30-, and 40-year bond issuances under the Fully Accessible Route; removal of investment limits on certain government securities; increased NRI and OCI investment limits extended to all offshore individuals; a concessional forex swap facility through September 30; incentives for PSU external commercial borrowings; full hedging cost coverage for banks raising 3–5 year FCNR(B) deposits through September 30; and restoration of a nine-month realisation window for export proceeds.
The week ahead centres on May CPI data and University of Michigan inflation expectations on Wednesday. COMEX gold is expected to range between $4,376 and $4,510, with MCX gold trading ₹1,52,000–₹1,63,000 and MCX silver within ₹2,40,000–₹2,73,000. A softer CPI reading could revive dovish positioning and push gold back above $4,500. A second consecutive upside inflation surprise would reinforce hawkish repricing and bring the $4,200–$4,300 COMEX support zone into focus.
MCX Gold Spot
Gold is currently trading at deeply oversold levels near the critical support zone of $4,300 (approximately ₹1,54,000). A technical rebound of 3–4% is anticipated from current levels, driven by bottom-fishing activity. However, a sustained break below this support would shift the near-term bias decisively lower, exposing the $4,000–$4,100 range (approximately ₹1,50,000–₹1,51,500) as the next downside target.
MCX Silver Spot
Silver is similarly oversold, testing key support in the $66–$67 range (approximately ₹2,40,000–₹2,42,000). As with gold, a 3–4% technical recovery is the base case on dip-buying, but a confirmed sustainability below this support would accelerate selling pressure toward $60 (approximately ₹2,20,000) in the short term.
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