Gold, silver prices rebound from multi-month lows as crude oil retreats; what is driving the recovery?

Gold and silver prices recovered in Monday’s trade after hitting multi-month lows, as easing inflationary pressures amid a sharp retreat in crude oil prices supported sentiment. A drop in the US dollar also lent support to the rebound in precious metals. The December gold futures contract on the MCX gained ₹2,039 per 10 grams to touch the day’s high of ₹1,40,524. In the previous session, the yellow metal had fallen to its lowest level since March.

Silver prices also attempted a recovery, with the futures contract rising ₹5,543 per kg to ₹1,84,675. The rebound came after silver logged back-to-back monthly losses, with October marking its steepest monthly decline, at 20%, or ₹44,574 per kg and during the period, it touched the lowest level in 10 months.Crude oil falls 7% as hopes of US-Iran diplomatic breakthrough growCrude oil prices extended the decline on Monday, with Brent crude futures dropping 7% to below $105 a barrel, as hopes for a diplomatic resolution to the US-Iran conflict eased concerns over further supply disruptions.Iran reportedly said on Monday that it had a two-day plan to reopen the Strait of Hormuz and resume nuclear talks with the United States.

This came shortly after the country's Supreme Leader approved the government's pursuit of talks aimed at ending the months-long conflict, which has disrupted energy supplies in the Middle East, according to Iran's state-run IRNA news agency.Earlier, US President Donald Trump had also indicated that he wanted to give diplomacy more time before considering renewed military action. He reportedly told Israeli Prime Minister Benjamin Netanyahu that he preferred negotiations.Iran had previously said the plan could be implemented within a week if the US met seven conditions, including lifting its blockade of Iranian ports.

Tehran has now said that ships passing through the reopened strait would have to follow a route agreed upon by Iran and Oman and travel under Iranian supervision.Separately, Iranian officials have reportedly said that the US must lift sanctions on Iranian oil sales and agree to a ceasefire that would also include Lebanon.Meanwhile, the US dollar traded lower around 101.6, extending its losing streak to a fourth consecutive session, following a modest 0.4% gain in October.Gold and silver remain sharply below record highsDespite Monday's recovery, gold and silver continue to trade significantly below their record highs.Silver has lost 56% of its value from its record high of ₹4,20,048 per kg.

The sharp correction follows a 170% surge in silver prices in 2025.Gold has also witnessed a steep decline, falling ₹40,255 per 10 grams from its record peak of ₹1,80,779.Gold is traditionally considered a hedge against inflation and a safe-haven asset during periods of geopolitical uncertainty. However, higher interest rates reduce its appeal, as investors tend to shift towards yield-bearing assets.(With inputs from AP)Disclaimer: We advise investors to check with certified experts before making any investment decisions.