Heraeus precious metals analysts reported that gold prices remain constrained despite lower rate hike expectations as market participants focus on the Iran conflict, while India's new import controls have created 10% price premiums on domestic silver even as demand remains weak. In their latest update, the analysts noted gold has been trapped in a $250 range since the Federal Reserve's FOMC meeting on 17 June, bounded between $3,950/oz and $4,200/oz. The constraints stem from markets discounting positive economic data releases since the end of June, including PCE, CPI, and PPI figures that came in under expectations, as geopolitical tensions over the Strait of Hormuz and rising oil prices dominate investor attention.
Gold Remains Range-Bound Between $3,950 and $4,200 Since 17 June Fed Meeting
The Heraeus analysts wrote that in the week leading up to the Federal Reserve's FOMC meeting on 17 June, gold appeared to have shrugged off weakness induced by the US-Iran conflict as a Memorandum of Understanding was to be signed imminently and oil prices were falling. Following the 17 June meeting, which markets perceived as taking a significantly hawkish tilt, gold prices fell into the range where they remain today, bounded between $3,950/oz to the downside and $4,200/oz to the upside.
![article image]()
Markets Discount Positive Economic Data Amid Hormuz Conflict Concerns
Since the end of June, three successive price data releases—PCE, CPI, and PPI—came in under expectations, the analysts noted, although these failed to significantly move markets even though expectations about near-term interest rate hikes have abated. The US and Iran returned to conflict over differing interpretations of the MoU signed in June, causing oil prices to rise by approximately $10/bbl and leading to reductions in precious metal prices, though not of the same magnitude as at the start of the conflict in March.
WTI Crude Oil Drop Below $100 on 21 May Feeds Through to Lower Inflation
WTI crude oil prices dropped below $100/bbl on 21 May due to deescalation in the Middle East conflict, the analysts wrote, and oil continued to move lower consistently through June. Prices during June were significantly lower than in May, feeding through into falling consumer prices. US consumer and producer price indices dropped 0.4% month-on-month, and headline CPI dropped from 4.2% in May to 3.5% in June, coming in lower than the expectation of 3.8%. The analysts cautioned that although greater price stability is promising, the headline rate remains above the Fed's 2% target and rate hikes this year are still expected by markets.
Spot gold continued to test both sides of the $4,000 support level, last trading at $4,009.76 for a loss of 0.19% on the session.
![article image]()
India's Mid-May Import Restrictions Create Silver Supply Shortage
India's mid-May restrictions on silver imports, introduced shortly after the government raised gold and silver import duties from 6% to 15%, created a shortage in the domestic market despite relatively weak demand, the Heraeus analysts said. Silver imports fell to just 1.0 moz in May, more than 90% below the 5-year average for May of 14.1 moz. Imports were further restricted in June as the rules were tightened to include silver grain and powder and with import authorization also required.
Indian Silver Premiums Rise to $6.50 Above Official Prices
The reduction in available metal pushed Indian silver premiums to around $6.50/oz over official domestic prices, or more than 10% above benchmark prices, compared with discounts of as much as $5.50/oz in May, the analysts wrote. With domestic supply significantly short of demand, the import restrictions created a tight physical market.
![article image]()
India imported 1.0 moz of silver in June, down 84% from 6.3 moz in June 2025, Heraeus noted. This drop reflects the continued impact of recent import restrictions and duties designed to prop up the rupee. India is a crucial region for global silver demand with imports totaling 210 moz in 2025, accounting for roughly 18% of global silver demand.
Spot Gold Trades at $4,009.76, Silver at $56.962
Spot silver last traded at $56.962 per ounce for a gain of 1.90% on the daily chart as prices attempt to reclaim the $57 per ounce level.
![article image]()
FAQ
Why is gold not benefiting from lower rate hike expectations?
According to Heraeus analysts, gold prices are not benefiting from lower rate hike expectations because market participants are worried about the Iran conflict and tensions over the Strait of Hormuz, which are causing markets to discount positive economic data releases that came in under expectations since the end of June.
What caused Indian silver premiums to rise to 10% above benchmark prices?
India's mid-May restrictions on silver imports, introduced shortly after the government raised import duties from 6% to 15%, created a shortage in the domestic market. Silver imports fell to 1.0 moz in May, more than 90% below the 5-year average, pushing premiums to around $6.50/oz over official domestic prices, or more than 10% above benchmark prices.
How did falling oil prices affect US inflation in June?
WTI crude oil prices dropped below $100/bbl on 21 May and continued to move lower through June. This fed through into falling consumer prices, with US consumer and producer price indices dropping 0.4% month-on-month and headline CPI dropping from 4.2% in May to 3.5% in June, coming in lower than the expectation of 3.8%.
