Mumbai: Gold and silver prices declined sharply in domestic markets on Friday, October 30, tracking weakness in international bullion prices after stronger US inflation data increased expectations of another interest rate hike by the Federal Reserve later this year.
On the Multi Commodity Exchange (MCX), gold futures for December delivery fell by Rs 1,392, or 0.98%, to Rs 1,41,204 per 10 grams. During the session, the yellow metal touched an intraday low of Rs 1,41,177, marking a decline of Rs 1,419, or 0.99%.
Silver futures also witnessed heavy selling. MCX silver for December delivery slumped by Rs 5,312, or 2.80%, to Rs 1,84,141 per kg. The metal touched an intraday low of Rs 1,84,050, falling by as much as Rs 5,403, or 2.85%.
The decline followed a fall in international bullion prices, with investors reassessing the outlook for US monetary policy after the latest inflation figures. Higher interest rates can make non-yielding assets such as gold and silver less attractive compared with interest-bearing investments.
International gold prices extend their decline
Gold prices also weakened in overseas markets on Friday.
Spot gold fell 0.5% to $4,000.54 per ounce, while US gold futures for December delivery declined 0.5% to $4,010.10 per ounce.
Bullion was on track to record a second consecutive monthly decline, reflecting pressure from expectations of tighter US monetary policy and the changing outlook for interest rates.
The latest movement in international prices has also affected domestic futures. MCX gold has been tracking the weakness in COMEX gold, although it has held up relatively better than domestic silver in the latest session.
The broader market reaction suggests that investors are becoming more cautious about precious metals as inflation and interest-rate expectations influence global financial markets.
Strong US inflation fuels rate-hike expectations
The latest decline in bullion prices followed stronger-than-expected US inflation data.
The US Personal Consumption Expenditures (PCE) price index for September increased by 0.5% month-on-month, marking its strongest monthly rise since March.
The data reinforced expectations that the US Federal Reserve could raise interest rates again in December. Market expectations for a rate hike remained elevated at around 75%, according to the figures cited in the market update.
Pinky Yadav, Commodity Fundamental Analyst at Choice Broking, said persistent US inflation, elevated oil prices and resilient economic growth were contributing to pressure on MCX gold.
“MCX gold prices remain under pressure as persistent US inflation, elevated oil prices and resilient growth reinforce expectations of a December Fed rate hike,” Yadav said.
Interest rates are particularly important for gold because the metal does not generate interest or dividends. When borrowing costs and returns on interest-bearing assets rise, investors may reduce their exposure to bullion.
This can create downward pressure on gold prices, especially when markets expect monetary policy to remain restrictive for longer.
Dollar and Treasury yields offer a mixed signal
The US dollar index weakened towards 101.5, while Treasury yields also declined during the session.
A weaker dollar can generally support gold because it makes the metal relatively less expensive for buyers using other currencies. Lower Treasury yields can also reduce the opportunity cost of holding non-yielding assets.
However, these factors did not provide sufficient support to offset concerns about inflation and the possibility of further monetary tightening.
The market’s focus remains on the Federal Reserve’s policy outlook and the extent to which inflation could influence its next decisions.
For Indian investors, international bullion movements are also influenced by currency fluctuations, domestic demand and local market conditions. As a result, domestic prices do not always move by exactly the same percentage as overseas benchmarks.
Geopolitical uncertainty provides some support to gold
Despite the pressure from interest-rate expectations, geopolitical uncertainty continues to offer some support to precious metals.
Yadav said concerns over geopolitical tensions and mistrust associated with US President Donald Trump’s policies had encouraged some countries to seek greater control over their gold reserves.
She pointed to reports of nations repatriating gold held in New York vaults as part of efforts to ensure sovereign control over their reserves amid global uncertainty.
Gold is often considered a safe-haven asset during periods of geopolitical and financial instability. Central banks and governments may also hold it as part of their reserve-management strategies.
However, safe-haven demand has not been strong enough to prevent the recent decline in prices, with interest-rate expectations remaining a major influence on market sentiment.
MCX gold technical outlook
Gold has slipped below the Rs 1,43,000–Rs 1,43,700 range, which analysts now identify as an immediate resistance zone.
The next resistance level is placed between Rs 1,45,300 and Rs 1,46,000.
On the downside, the immediate support for MCX gold is seen in the Rs 1,40,000–Rs 1,41,000 range. A further support zone is identified between Rs 1,37,500 and Rs 1,38,300.
Ponmudi R, CEO of Enrich Money, said the technical indicators suggested that selling pressure remained significant.
The Relative Strength Index (RSI), near 34, indicates weak momentum. The Moving Average Convergence Divergence (MACD) histogram is also widening on the downside, pointing to continued selling pressure.
Ponmudi said the near-term outlook remained cautious. A sustained recovery above Rs 1,43,000–Rs 1,43,700 would be needed to stabilise prices, while a decisive break below the Rs 1,40,000–Rs 1,41,000 support range could expose the metal to further declines towards Rs 1,37,500–Rs 1,38,300.
These levels are technical reference points rather than guaranteed price targets.
Silver faces sharper selling pressure
Silver recorded a steeper decline than gold during Friday’s session.
MCX silver futures fell 2.80% to Rs 1,84,141 per kg, after touching an intraday low of Rs 1,84,050. The fall of more than Rs 5,300 reflected the metal’s greater sensitivity to changing market sentiment.
Unlike gold, silver has significant industrial applications in addition to its role as an investment asset. It is used in sectors such as electronics, solar energy and other manufacturing industries.
This dual role can make silver prices sensitive to both financial-market developments and expectations for industrial demand.
The latest fall in silver, therefore, reflects broader weakness across precious metals, although the factors influencing its price can differ from those affecting gold.
What investors should watch next
The immediate direction of gold and silver prices will depend on developments in the US inflation outlook, Federal Reserve expectations, the dollar and global bond yields.
For gold, the Rs 1,40,000–Rs 1,41,000 support range will be an important level to monitor. A sustained recovery above the Rs 1,43,000–Rs 1,43,700 resistance zone could indicate some stabilisation, while a decisive break below support may increase the risk of further weakness.
Silver’s sharper fall also highlights the need to track its industrial-demand outlook alongside movements in international bullion markets.
Friday’s decline has left the near-term outlook for both metals cautious. Although geopolitical uncertainty and reserve diversification may continue to support gold over the longer term, immediate price movements remain sensitive to expectations of US monetary tightening.
For investors, the latest correction underlines the importance of monitoring global economic data, currency movements and technical levels rather than assuming that precious metals will always rise during periods of uncertainty.