Gold and silver are bracing for another challenging week as surging crude oil prices reignite inflation worries. The focus will be on the US Federal Reserve's policy decision on October 27-28, which could shape the trajectory of precious metals. Analysts warn that if the Fed signals higher interest rates for longer, bullion prices may face further downward pressure.
Domestic markets saw significant declines last week, with gold futures for December delivery on the Multi Commodity Exchange (MCX) dropping ₹5,768, or nearly 4%, to close at ₹1.42 lakh per 10 grams. Silver fared worse, shedding ₹15,087, or 7.14%, to settle at ₹1.96 lakh per kg. Internationally, Comex gold futures fell $173.2, or 4.14%, to close at $4,007.9 per ounce, while silver futures dropped $3.35, or nearly 6%, to settle at $53.95 per ounce.
Analysts attribute the pressure on precious metals to elevated bond yields and a stronger dollar. Jateen Trivedi of LKP Securities noted that the near-term outlook remains cautious, with gold likely to stay under pressure until there is clarity on the Federal Reserve's policy path. Pranav Mer of JM Financial Services Ltd. added that higher energy costs and softer demand are also contributing to the decline in silver.
The upcoming Fed meeting, along with policy decisions from the European Central Bank and the Bank of Japan, will be closely watched. Other key factors include US durable goods orders, consumer confidence, Personal Consumption Expenditures inflation, and third-quarter GDP data. Geopolitical developments, such as the US mid-term elections, Russia-Ukraine peace talks, and the West Asia conflict, will also influence market sentiment.