Gold and Silver Prices Under Pressure Ahead of Fed Meeting on October 27-28
As crude oil prices rise, analysts warn that gold and silver may face further challenges, with the Fed's upcoming policy decisions in focus.
Gold futures on MCX fell nearly 4% to Rs 1.42 lakh per 10 grams over the past week.
Silver prices dropped 7.14%, settling below Rs 2 lakh per kg.
The Fed's policy meeting on October 27-28 could significantly influence bullion prices.
Gold and silver are poised to encounter additional challenges in the upcoming week due to rising crude oil prices, which have reignited inflation fears. Analysts indicate that the Federal Reserve's policy decisions during its meeting on October 27-28 will play a crucial role in determining whether the prices of these precious metals stabilize or continue their downward trajectory.
The current market environment has already been tough for gold and silver, with elevated bond yields and a stronger dollar contributing to their struggles. The focus will not only be on the Fed's decisions but also on upcoming announcements from the European Central Bank and the Bank of Japan, as well as key economic indicators from the U.S., including durable goods orders and consumer confidence.
Recent data shows that gold futures for December delivery on the Multi Commodity Exchange (MCX) have dropped by Rs 5,768, or nearly 4%, closing at Rs 1.42 lakh per 10 grams. Silver has experienced an even steeper decline, falling below the Rs 2 lakh threshold, with a loss of Rs 15,087, or 7.14%, to settle at Rs 1.96 lakh per kg. Analysts like Jateen Trivedi from LKP Securities suggest that the near-term outlook for gold remains cautious, with prices likely under pressure until there is more clarity on the Fed's policy direction.
In international markets, gold futures for December delivery on Comex fell by USD 173.2, or 4.14%, closing at USD 4,007.9 per ounce. Silver futures also declined by USD 3.35, nearly 6%, settling at USD 53.95 per ounce. The persistent weakness in precious metals has been attributed to high U.S. Treasury yields and a robust dollar, which have hindered recovery attempts and left prices vulnerable to further declines.
The implications of rising energy costs, particularly with Brent crude settling above USD 117 per barrel, are adding pressure to bullion prices. Analysts warn that if the Fed adopts a hawkish stance, indicating limited room for rate cuts or potential further tightening, it could strengthen the dollar and elevate yields, thereby exerting additional pressure on gold and silver. Conversely, a more dovish tone from the Fed could provide some relief to the precious metals market, potentially triggering short covering and stabilizing prices.
