Gold and silver prices fell in international markets on Tuesday, October 13, as a firm US dollar and uncertainty over the Federal Reserve’s interest-rate outlook weighed on precious metals ahead of US inflation data.
COMEX gold futures were trading at $4,173.70 an ounce, down $16.90, or 0.40%, from the previous close of $4,195.50 an ounce. COMEX silver futures declined $0.698, or 1.15%, to $59.815 an ounce, compared with the previous close of $60.555 an ounce.
The dollar’s strength has limited the upside for precious metals, while elevated oil prices and geopolitical tensions have added to uncertainty over the inflation outlook. Investors are watching US consumer price data for clues on the Federal Reserve’s next policy moves.
Gaurav Garg, head of research at Lemonn, said gold was trading lower as investors awaited US inflation data and other economic releases for signals on the Fed’s interest-rate outlook. He noted that the US Dollar Index remained near an 18-month high, limiting the upside for precious metals despite softer oil prices in the previous session.
Gold and silver are sensitive to movements in the US dollar and bond yields because they do not generate interest income. A stronger dollar makes dollar-denominated bullion more expensive for buyers using other currencies, while higher yields can make interest-bearing assets more attractive relative to precious metals.
Geopolitical developments and energy prices are also influencing market sentiment. Brent crude was near $105.90 a barrel, close to a two-week high, amid concerns over West Asia supply risks. Higher oil prices can add to inflationary pressure and complicate expectations for interest-rate cuts.
Charu Chanana, chief investment strategist at Saxo, said markets were refocusing on the inflationary implications of geopolitical developments as renewed oil-price pressures affected bond yields and risk sentiment.
For bullion, the implications are mixed. Geopolitical uncertainty can support demand for safe-haven assets such as gold, but higher inflation expectations and the prospect of interest rates staying elevated for longer can weigh on prices.
What are analysts watching next?
US inflation data, Federal Reserve signals, the dollar and Treasury yields are among the key factors likely to influence bullion prices in the near term.
Prithviraj Kothari, managing director of RiddiSiddhi Bullions and president of the India Bullion and Jewellers Association, said hawkish Fed commentary, a firm dollar and elevated US Treasury yields had weighed on gold and silver during the previous week. Sentiment subsequently improved after comments about productive discussions with Iran eased some concerns over oil prices and inflation.
Kothari also pointed to continued gold purchases by China and record global gold exchange-traded fund holdings as sources of support for the metal. However, Indian buyers remain price-sensitive ahead of the festive season.
Darshan Desai, CEO of Aspect Bullion and Refinery, said gold had recovered from near two-month lows on bargain buying and softer US yields, but remained sensitive to the dollar, interest-rate expectations and geopolitical developments.
What does this mean for Indian buyers?
International bullion prices are only one factor determining domestic gold and silver rates. The rupee-dollar exchange rate, import costs, duties and domestic premiums also influence prices in India.
A weaker rupee can cushion the impact of falling international gold prices by making imports more expensive in rupee terms. Conversely, rupee appreciation can reduce some of that support.
For buyers planning festive-season purchases, the latest international decline does not necessarily translate into an equivalent fall in domestic prices. Local rates and currency movements will also matter.
The near-term direction of bullion prices will depend on how US inflation data affect expectations for monetary policy, alongside movements in the dollar, bond yields and geopolitical risks.
-With Reuters inputs
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Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers should consult certified experts before making any investment decisions.