Gold and Silver Prices Drop on Stronger Dollar and Higher Yields

Gold and silver prices fell in international markets on Wednesday, October 7. COMEX gold dropped 0.31% to $4,174.30 an ounce, while COMEX silver declined 0.47% to $61.30 an ounce. This downturn follows a ₹200 drop in domestic gold prices to ₹1.49 lakh per 10 grams on Tuesday, with silver holding steady at around ₹2.27 lakh per kg.

The pressure on precious metals stems from a stronger US dollar and higher US Treasury yields, according to Prithviraj Kothari of RiddiSiddhi Bullions Ltd. Gold's lack of interest income makes it less attractive when bond yields rise, and a stronger dollar increases costs for buyers using other currencies. However, softer-than-expected US jobs data for September has slightly supported gold by reducing expectations of a Federal Reserve rate hike in October.

Silver also faced downward pressure, breaking below its head-and-shoulders neckline to reach $60 an ounce. Kothari identified $57 an ounce as the next key level to watch. For gold, holding the $4,100-per-ounce level (around ₹1.48 lakh per 10 grams) is crucial, as a sustained break below could push prices toward $4,000 an ounce (or ₹1.44 lakh per 10 grams). These technical levels, however, do not account for domestic factors like exchange rates, import costs, taxes, and local demand.

Moving forward, investors will monitor US interest-rate expectations, the dollar, bond yields, and geopolitical developments, particularly in West Asia. Domestically, gold demand remains subdued, partly due to the Pitru Paksha period, according to Saumil Gandhi of HDFC Securities.