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Gold and silver prices declined on the Multi Commodity Exchange (MCX) on Friday, October 30, tracking weakness in international bullion markets amid concerns over persistent US inflation and expectations of tighter monetary policy.
MCX December gold futures were trading at ₹1.41 lakh per 10 grams, down 0.58%, while December silver futures fell 2.40% to ₹1.84 lakh per kg.
In the international market, spot gold slipped below the psychologically important $4,000-per-ounce mark, while silver extended its losses. Concerns that elevated inflation could keep US interest rates higher for longer have weighed on demand for precious metals, which do not offer interest income.
Vedika Narvekar, Research Analyst – Commodities & Currencies at Anand Rathi Share and Stock Brokers, said gold fell 1% to $3,983 per ounce on Friday (October 30), moving below the $4,000 anounce mark and close to its lowest level since mid-July. Silver declined 2.5% to $50.86 per ounce.
She attributed the pressure partly to US inflation data. The US Personal Consumption Expenditures (PCE) price index rose 0.5% in September, its biggest monthly increase since March, adding to concerns about the inflation outlook and the possibility of further monetary tightening by the Federal Reserve.
Ashish Rajodiya, Head of Commodities at PL Capital, said gold and silver are under pressure following the Federal Reserve's hawkish policy stance. He also pointed to stronger US economic data and expectations of a possible December rate hike as factors keeping precious metals under pressure.
Why are gold and silver prices falling?
Higher interest rates can weigh on gold and silver because they increase the opportunity cost of holding non-yielding assets. Expectations of tighter US monetary policy can also support the dollar and bond yields, making precious metals less attractive to investors.
Elevated crude oil prices are adding to inflation concerns. Vikram Kasat, Chief Business Officer – Advisory and Dealing at PL Capital, said Brent crude hovering around $115 per barrel amid escalating West Asia tensions remains a concern for India's import bill, inflation and currency stability.
Piyush Mehta, Smallcase Manager at Caprize Investment Managers, said geopolitical tensions involving the US, Israel and Iran have created uncertainty in global markets. However, higher energy prices could keep inflation elevated, potentially delaying monetary easing and limiting gold's upside.
He also highlighted that gold may face selling pressure during periods of liquidity stress, when investors sell assets to raise cash or meet margin requirements, even though it is traditionally considered a safe-haven asset.
Gaurav Garg, Head of Research at Lemonn, said gold's decline below $4,000 anounce reflects stronger-than-expected US inflation data and rising expectations of a December Fed rate hike. He added that silver is facing greater selling pressure, reflecting weakness across precious metals and concerns over industrial demand.
What is the outlook for gold and silver?
Narvekar said the immediate support level for international spot gold is $3,950 per ounce, with a break below this level potentially opening the way towards $3,900 an ounce. Resistance is placed at $4,070 per ounce.
For MCX gold, she indicated a broad trading range of ₹1.40 lakh-₹1.44 lakh per 10 grams.
Mehta said gold could remain volatile in the near term, with the $4,000-per-ounce level an important psychological marker to watch. Further escalation in West Asia tensions could support safe-haven demand, while a stronger dollar and expectations of a hawkish Federal Reserve could restrict gains.
He added that central-bank purchases, geopolitical fragmentation and portfolio diversification could continue to support gold's longer-term investment appeal.
NOTE TO READERS
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers should consult certified experts before making any investment decisions.
