On COMEX, gold was trading at $4,191.90 an ounce, up $5.20 or 0.12%, on October 1. The metal had touched an intraday high of $4,194.60 and a low of $4,169.40 an ounce.
Silver was at $60.965 an ounce, up $0.399 or 0.66%, after moving between $60.260 and $61.070 an ounce.
The latest moves come after gold recovered on September 30 following a sharp correction in the previous sessions. In the domestic market, gold of 99.9% purity rose ₹700 to ₹1.49 lakh per 10 grams on Wednesday (September 30), while silver remained unchanged at ₹2.32 lakh per kg, according to local traders.
What is driving gold prices
A key factor for bullion remains the direction of US Treasury yields and expectations around Federal Reserve policy. Higher yields can weigh on gold and silver because the precious metals do not generate interest income.
Daniel Munday, Principal Analyst at VT Markets, said the recent pullback in gold and silver has to be viewed against the backdrop of elevated yields, despite expectations for fewer rate hikes after dovish comments from New York Fed President John Williams.
With several US economic data releases due this week and the US jobs report scheduled for October 2, investors are likely to focus on whether incoming data changes expectations for the Fed’s October 28 meeting.
Vedika Narvekar, Research Analyst – Commodities & Currencies at Anand Rathi Share and Stock Brokers, said gold remained caught between supportive factors and headwinds. She pointed to Treasury yields as a constraint, while lower oil prices have eased some inflation concerns.
Narvekar also highlighted rising gold ETF holdings, which have increased for five consecutive days, as a sign that longer-term investment demand has remained present despite the recent correction.
Gold had a sharp September correction
Gold is coming off a volatile September. The metal had rallied strongly earlier in the year before correcting as expectations around US monetary policy shifted and yields and the dollar remained supportive of the US currency.
Nirpendra Yadav, Senior Research Analyst at Bonanza, said the recent correction has been driven largely by a stronger US dollar, elevated Treasury yields and changing expectations around US monetary policy. He noted that gold remains around 10% above year-ago levels, indicating that the broader rise has not been completely reversed.
According to Yadav, the key indicators to watch are the dollar, Treasury yields, Fed policy expectations and gold ETF flows. Physical demand during the festive season could also provide support, although high prices may continue to affect jewellery demand.
What about physical demand
The start of China’s Golden Week could provide some near-term support to precious metals demand, particularly gold, according to Narvekar. In India, the upcoming festive and wedding season is another factor being watched by the bullion market.
Darshan Desai, CEO of Aspect Bullion & Refinery, said the recent correction could be viewed as a recalibration rather than necessarily a change in the broader gold market trend. He expects physical demand to gradually become more active if prices stabilise, with jewellers taking a measured approach to inventory and consumers potentially using price dips to stagger purchases.
Silver remains more volatile
Silver has been more volatile than gold during the recent correction.
The metal remains sensitive to the same macro factors affecting gold, including the dollar, US yields and monetary policy expectations, while also having an industrial-demand component.
Gaurav Garg, Head of Research at Lemonn, said silver remained volatile amid movements in the dollar and US yields.
What investors should watch next
For gold and silver prices, the immediate focus is likely to remain on US economic data, the October 2 jobs report, Treasury yields, the dollar and changing expectations for the Fed’s next policy decision.
Oil prices and developments in the West Asia could also influence inflation expectations and, in turn, the outlook for US interest rates.
For Indian investors, the rupee will be an additional factor. A weaker rupee can cushion domestic gold and silver prices even when international bullion prices are under pressure.
Vikram Subburaj, CEO of Giottus.com, said the sharp correction has moderated but volatility could remain high. He advised investors building long-term exposure to consider staggered purchases rather than attempting to identify the exact market bottom.