Gold and Silver Rally on Softer US Inflation Data
Gold prices climbed 0.91% to settle at Rs150,390, buoyed by a softer-than-expected US inflation report that reduced the likelihood of a Federal Reserve rate hike in October. The market-implied probability of an October hike dropped to 37% from 45%, though expectations for a December increase remained high at 89%. HSBC revised its gold price forecasts downward, citing anticipated US rate hikes and higher oil prices, while Goldman Sachs maintained a bullish long-term outlook. Physical demand saw modest improvements in Asian markets, with Indian dealers offering narrower discounts ahead of key festivals.
Silver also rose 0.97% to Rs225,877, supported by the same US inflation data that tempered Fed rate hike expectations. Treasury yields remained elevated, and Fed officials emphasized the need for further rate hikes to combat persistent inflation. London silver vault holdings increased slightly, while the global silver market faces a widening structural deficit, driven by declining industrial and jewelry demand. Technically, silver is finding support near Rs224,295, with resistance at Rs227,175.
Crude oil prices surged 2.08% to Rs8,916 after China suspended oil-product exports beyond Hong Kong and Macau, raising concerns over tighter fuel markets. Diplomatic efforts to end the US-Israeli conflict with Iran continued, with Iranian officials warning of a stronger response if attacks resume. US crude inventories unexpectedly rose, while gasoline and distillate stocks declined, supporting middle-distillate prices. OPEC lowered its 2026 oil demand growth forecast, while the IEA warned of potential market tightness into 2027 due to Middle East supply disruptions.
Natural gas prices fell 0.96% to Rs287.5, pressured by expectations of rising production and mild weather conditions that could subdue demand. The US Energy Information Administration reported a storage build, reinforcing concerns over comfortable supply levels. US gas output matched record monthly levels, contributing to the downward pressure on prices.