Gold and silver prices have dropped sharply this week, offering some relief to buyers ahead of India's wedding season. However, the sell-off has raised concerns about further declines, especially with hotter-than-expected US inflation strengthening expectations of another Federal Reserve rate hike. On the Multi Commodity Exchange (MCX), gold futures for December delivery ended Friday higher by ₹525, or 0.39%, at ₹1,36,750 per 10 grams. Silver contracts also recovered, gaining ₹234, or 0.13%, to ₹1,76,543 per kg. Despite Friday's recovery, both metals remained sharply lower for the week, with MCX gold declining around 4.6% and silver falling nearly 5%.
The sell-off was driven by a stronger US dollar, rising bond yields, and concerns over the US interest-rate outlook. Gold witnessed its steepest fall on Thursday, dropping nearly 3% to a year-to-date low. Bargain buying helped the yellow metal recover some losses in the following session. Silver tracked gold's decline but experienced sharper price swings due to its higher volatility. The sell-off followed the hotter-than-expected US inflation reading for October, which strengthened expectations of a December rate hike.
Ponmudi R, CEO of Enrich Money, said MCX gold ended the week with a negative bias, closing near ₹1,36,705 after breaking below the ₹1,37,500, ₹1,38,300 support zone. Immediate resistance is placed at ₹1,37,500, ₹1,38,300, followed by ₹1,40,000, ₹1,41,000. On the downside, ₹1,35,066, ₹1,34,000 is the immediate support zone. Rajeev Sharan, Head of Research at Brickwork Ratings, expects gold to trade in the $3,850, $4,000 an ounce range in the near term, with wedding demand in India and steady central bank purchases helping to limit the downside.
Silver has also remained under pressure, with prices trading below the key ₹1,80,000 mark on MCX and $50 an ounce internationally. Ponmudi said MCX silver ended the week with a negative bias, closing near ₹1,76,309 and remaining below key resistance levels. Immediate resistance is placed at ₹1,78,000, ₹1,80,000, followed by ₹1,88,000, ₹1,90,000. A sustained move above these zones could improve the recovery outlook. On the downside, ₹1,72,000, ₹1,70,000 is the immediate support range. The coming week could prove important for precious metals, with the release of the Federal Reserve meeting minutes and Nvidia's earnings among the key events on investors' radar.