Gold and Silver Prices Experience Significant Weekly Decline Amid Inflation Concerns
Market Overview
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New Delhi, Oct 24: This week, gold prices fell by 3.28%, while silver saw a sharper decline of 7.83%, driven by escalating crude oil prices that have sparked inflation worries.
Concerns over rising inflation have heightened expectations that global interest rates may remain elevated for an extended period, leading to increased selling pressure in the precious metals market.
On Friday, December gold futures on the MCX dropped by 0.81%, while December silver futures decreased by 1.75%. Currently, gold futures are priced at Rs 1,42,150, and silver futures at Rs 1,96,100 per kg.
Analysts noted that gold experienced its most significant weekly drop since June, falling below the critical $2,000 per ounce mark for the first time since mid-July.
The decline in silver was exacerbated by weakness in US tech stocks, particularly those linked to AI, which led to margin calls and prompted investors to liquidate their precious metal holdings.
Additionally, crude oil prices surged to multi-month highs due to renewed attacks on Saudi energy infrastructure and shipping routes, while the Indian rupee lost its early-week gains amid rising oil prices and increased demand for dollars.
Despite the downturn, lower gold prices have spurred physical purchases in India during the Dussehra festival, providing some support for demand, although Chinese jewelry demand remains lackluster.
Market analysts predict that precious metals may continue to face pressure if high energy prices sustain inflation fears and expectations of tighter monetary policy. However, physical demand and a potential easing of bond yields could provide some support following the recent downturn.
Most market participants anticipate that the US Federal Reserve will maintain interest rates at the upcoming policy meeting on October 27–28, although there is a strong expectation for another rate hike in December, with traders estimating a 78% probability.
Investors are also looking forward to the US Personal Consumption Expenditures report next week for further insights into inflation and future interest rate policies.
For Comex Gold, immediate resistance is identified in the $2,070–$2,100 range, while support is seen at $1,970–$2,000. For MCX Gold, resistance is noted at Rs 1,43,000–Rs 1,43,700, with support at Rs 1,40,000–Rs 1,41,000.