Gold prices are expected to remain volatile in the coming week, as analysts predict a corrective phase ahead of crucial economic data releases from the US and China. The focus will be on US inflation data, trade tariff uncertainties, and key economic indicators from China. Additionally, traders will closely monitor comments from US Federal Reserve officials for clarity on monetary policy, which could significantly impact bullion prices in the short term.
According to Pranav Mer, Vice President of Commodity & Currency Research at JM Financial Services Ltd, gold prices are likely to experience consolidation or further correction. This is due to the attention on inflation numbers, the US Supreme Court hearing on tariffs, speeches from Fed officials, and Chinese economic data. Despite a slight decline in gold prices at the end of the week, the metal remains within a range, influenced by a stronger dollar and weak physical demand from retail buyers who are awaiting further price corrections.
However, Mer also highlights the potential downside risks. The ongoing federal government shutdown in the US has delayed critical macroeconomic data releases, which could complicate the Fed's decision-making process when they meet next month. The US Supreme Court's decision on the legality of Trump's trade tariffs is also expected to increase market volatility, particularly in gold prices.
In the near term, gold prices are being driven by factors such as a weak US labor market report, safe-haven demand, potential interest rate cuts in the US, and central bank buying. Prathamesh Mallya, DVP of Research at Angel One, notes that gold is on track for its annual gain since 1979. If current fundamental factors persist, further volatility could lead to a rally in gold prices.
On the international market, Comex gold futures for December delivery gained 0.33% during the past week, settling at USD 4,009.8 per ounce. Riya Singh, Research Analyst at Emkay Global Financial Services, attributes this to shifting expectations over US monetary policy and labor market data. However, mixed signals from Federal Reserve officials and the absence of key inflation data due to the US government shutdown have tempered optimism.
Despite a 10% retreat from its record high above USD 4,390, gold is on course for a third straight weekly loss but remains up more than 50% year-to-date, its strongest performance since 1979. Singh attributes this surge to rate cuts, persistent central bank purchases, and steady inflows into gold-backed exchange-traded funds. However, bullion ETFs experienced outflows in the last two weeks of October as investors booked profits.
Silver prices have also remained range-bound during the week, mirroring the trend in gold and industrial metals. On the MCX, silver futures for December delivery declined by 0.38% to Rs 1,47,728 per kilogram. Singh notes that silver has steadied above the USD 48 per ounce mark, supported by safe-haven demand and concerns over the US government shutdown. The US's addition of silver to its official list of critical minerals could lead to new tariffs and trade restrictions, impacting global supply chains and price volatility.
Mer adds that silver's price momentum is likely to be consolidative or corrective as long as it remains below Rs 1,50,000-1,51,000 per kilogram, with key support at Rs 1,39,300-1,38,000 per kg. Despite policy ambiguity and profit-taking, resilient industrial demand, geopolitical risks, and a weak US dollar are expected to keep silver prices well-supported above USD 47.55 per ounce in the coming sessions.
