Gold Recovers but Faces Cautious Near-Term Outlook

Gold prices have shown signs of recovery this week after a sharp correction in late September, but the near-term outlook remains cautious. Domestic gold futures hit a low of Rs 1,48,850 per 10 grams on October 5 before rebounding to Rs 1,49,750, still down 0.43% over the past 24 hours. Spot gold also declined marginally to Rs 1,47,547 per 10 grams, while international spot gold rose 0.34% to $4,154 per ounce.

Commodity experts attribute the recent recovery to easing expectations of an October US Federal Reserve rate hike and safe-haven demand due to rising US government debt. However, a stronger US dollar and high interest rates could limit further upside. Technical analysis suggests gold needs to sustain above $4,100, $4,120 per ounce to maintain momentum, with $4,230 acting as a key resistance level.

Silver outperformed gold, falling 6.1% last week to $60.37, driven by a broader sell-off in industrial metals and sensitivity to rate expectations. The US-Iran standoff has kept oil and inflation expectations volatile, contributing to a 20% decline in bullion since the conflict began. The Dollar Index rose 0.9% to 101.92, its third weekly gain, while US Treasury yields climbed to their highest since 2002.

Investors are advised to remain cautious, with key events this week including the RBI’s October 7 policy decision, Fed speakers, US trade data, and the University of Michigan consumer sentiment survey. Experts recommend buying on dips rather than chasing highs, as a firm dollar and yields above 5% may cap any rally.