Precious Metals Gain as Rate Hike Expectations Ease
Gold prices rose 0.54% to Rs1,50,120 as expectations of a Federal Reserve rate hike in October eased following weaker-than-expected US job growth in September. The revised downward payrolls tempered rate hike expectations, though gains were limited by a stronger dollar and elevated Treasury yields, which hit 24-year highs. Analysts still anticipate an 87% probability of a December rate hike, with inflation risks persisting into 2027. HSBC adjusted its gold forecasts downward, predicting $4,490 per ounce for 2026 and $4,825 for 2027, citing anticipated rate hikes and higher oil prices. Physical demand in Asia improved modestly, with Indian dealers offering discounts up to $14 per ounce, while China saw $5-$10 premiums. London vault holdings stood at 9,534 tonnes as of July, valued at $1.2 trillion.
Silver settled 0.51% higher at Rs2,27,242, supported by softer US jobs data and reduced rate hike expectations, though gains were capped by a stronger dollar and rising Treasury yields. Markets now assign a 78% probability of no rate hike in October. COMEX silver speculators cut net long positions by 5,278 contracts, indicating cautious positioning. London silver vault holdings reached 28,213 tonnes at the end of July, valued at $52.7 billion. Despite weaker demand expectations, the global silver market faces a sixth consecutive structural deficit, with 762 million troy ounces drawn from stocks since 2021.
Crude oil prices dropped 0.47% to Rs8,628 as Middle Eastern crude exports remained resilient and a G7 emergency stockpile release eased supply concerns. OPEC+ decided to maintain November production targets, noting persistent market volatility and tight supply conditions. US crude inventories rose unexpectedly by 922,000 barrels, while refinery runs declined. The IEA warned of potential market tightness due to shrinking inventories and stretched refining capacity. OPEC lowered its 2026 global oil demand growth forecast to 380,000 barrels per day.
Natural gas prices climbed 2.07% to Rs301.2, supported by lower US production due to pipeline disruptions and increased flows to LNG export facilities. US Lower 48 output fell to an average of 111.7 billion cubic feet per day in October, with expectations of further declines due to force majeure events. The December-November futures premium narrowed to a record low near 28 cents per mmBtu, suggesting limited winter supply concerns.