Gold and silver are expected to face another choppy spell, with US data, West Asia tensions and their impact on crude prices set to test bullion sentiment during a holiday-shortened week, analysts said.
Market participants will shift their focus to the US data calendar, with consumer confidence, GDP and PCE inflation readings, alongside Eurozone inflation.
Additionally, manufacturing PMIs, speeches from Federal Reserve officials and the US non-farm payrolls report will provide further cues for bullion sentiment, they added.
Geopolitical uncertainty will continue to play a role, particularly the US-Iran standoff, after US President Donald Trump said that he rejected Tehran’s proposal to reopen the Strait of Hormuz within a week and resume nuclear talks in exchange for lifting the naval blockade.
Commodity markets would remain closed on Friday for Mahatma Gandhi Jayanti.
“The broader outlook remains cautious with volatility likely to stay elevated as the market will closely focus on the upcoming US nonfarm payrolls and unemployment data, which will be crucial in determining expectations around the Federal Reserve’s October policy decision,” Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said.
On the Multi Commodity Exchange (MCX), gold futures for October delivery fell Rs 3,500, or nearly 2.3 per cent, last week to settle at Rs 1.5 lakh per 10 grams. Silver futures declined Rs 6,907, or 3 per cent, to Rs 2.34 per kilogram.
“Gold remained highly volatile last week, trading within the Rs 1.5-1.54 lakh per 10 grams range and ending lower by more than 2 per cent as profit booking from higher levels continued as markets increasingly priced in the possibility of another Fed rate hike in October,” Trivedi said.
The recovery remained limited as traders cut positions at elevated levels.
A sustained rise in the dollar index above 101 could add to the pressure on gold, as a stronger dollar tends to reduce demand for dollar-denominated bullion.
In global markets, Comex gold futures for December delivery dropped USD 103.7, or 2.34 per cent, last week to USD 4,321.2 per ounce. Silver fell USD 2.35, or 3.5 per cent, to USD 64.80 an ounce in New York.
“Gold futures traded in a range for most trading sessions last week but overall remained under selling pressure with international prices closing around USD 4,300 per ounce,” said Pranav Mer, Senior Vice President, EBG – Commodity & Currency Research, JM Financial Services Ltd.
Silver futures also ended with a weekly loss following gold and consolidation and correction in industrial metals, he said.
The pressure is not coming from currencies alone. US 10-year Treasury yields have climbed to their highest since 2007, while 30-year yields are near 2004 highs. Higher long-term yields tend to dent demand for assets such as gold and silver even as West Asia and Russia-Ukraine tensions persist.
Oil markets offer another variable. Russia and Ukraine continue to target energy infrastructure, but higher supplies from Saudi Arabia and Iraq have improved availability this month and weighed on crude prices, Mer said.
For gold, the next big test will be the US jobs report. A stronger reading could reinforce rate-hike bets and pressure prices, while weaker employment data may cool those expectations and support bullion through a softer dollar, Trivedi said.
