Gold and silver are expected to face fresh headwinds next week as surging crude oil prices revive inflation concerns, while the US Federal Reserve’s policy decision could determine whether bullion rates stabilise or extend their downward trend, analysts said.
The precious metals, already battered by elevated bond yields and a stronger dollar, will look to the Federal Reserve’s October 27-28 meeting and its chair’s commentary for signals on whether interest rates could stay higher for longer.
The focus will also be on policy decisions from the European Central Bank and the Bank of Japan, along with US durable goods orders, consumer confidence, Personal Consumption Expenditures inflation and third-quarter GDP data.
Eurozone inflation readings, developments around the US mid-term elections, Russia-Ukraine peace talks and the West Asia conflict will also remain on the radar, they added.
“The near-term outlook remains cautious, with gold likely to remain under pressure until there is greater clarity on the Federal Reserve’s policy path. The upcoming decision could determine whether prices stabilise near current levels or extend their corrective trend,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.
The pressure was evident in domestic markets, where gold futures for December delivery on the Multi Commodity Exchange (MCX) fell Rs 5,768, or nearly 4 per cent, over the past week to close at Rs 1.42 lakh per 10 grams.
Silver suffered a steeper decline, slipping below the Rs 2 lakh mark, shedding Rs 15,087, or 7.14 per cent, to settle at Rs 1.96 lakh per kg.
“Gold continued its downward trend this week, declining more than 3 per cent on the MCX to trade near Rs 1,42,800 per 10 grams as elevated bond yields continued to weigh on bullion,” Trivedi said.
Higher US Treasury yields and a stronger dollar have curtailed recovery attempts in precious metals, leaving prices vulnerable to further selling pressure, he added.
In international markets, Comex gold futures for the December delivery declined USD 173.2, or 4.14 per cent, over the past week, to close at USD 4,007.9 per ounce. The yellow metal briefly slipped to USD 3,989 on Friday before recovering above the USD 4,000 level.
Silver futures fell USD 3.35, or nearly 6 per cent, to settle at USD 53.95 per ounce.
“Gold futures continued their corrective momentum with prices globally falling below USD 4,000 per ounce, closing the week down by 4 per cent,” said Pranav Mer, Senior Vice President, EBG – Commodity & Currency Research, JM Financial Services Ltd.
Silver’s decline reflected weakness across industrial metals and gold, alongside softer demand as industries explore alternatives or reduce their use of the white metal in response to high prices, he said.
Mer said elevated energy costs were adding another layer of pressure on bullion.
Brent crude settled above USD 117 per barrel, stoking concerns that persistent inflation could prompt global central banks to maintain tighter monetary policies or consider further rate hikes.
Trivedi said the sustained correction also highlights how sensitive investors have become to changing expectations around interest rates.
The Fed’s policy announcement and the chair’s commentary will therefore be central to bullion’s direction in the coming week.
“A hawkish stance, signalling limited scope for rate cuts or the possibility of further tightening, could strengthen the dollar and push yields higher, creating additional pressure on bullion. Conversely, a less hawkish tone could trigger short covering and provide some relief to prices,” Trivedi added.
