Gold and silver prices traded lower on Wednesday, October 28, as investors assessed the outlook for US interest rates, dollar strength and inflation risks amid renewed tensions in the West Asia.
On COMEX, gold was trading at $4,068.70 per ounce, down $5.90 or 0.14%, while silver stood at $54.410 per ounce, down $0.103 or 0.19%, according to the latest prices available at 7:24 am IST.
The weakness follows a decline in domestic bullion prices on Tuesday (October 27). Silver fell ₹4,000 to ₹1.98 lakh per kg in New Delhi, while gold dropped ₹500 to ₹1.45 lakh per 10 grams, according to the All India Sarafa Association.
Why are gold and silver prices falling?
Dollar strength and Fed policy uncertainty
A stronger US dollar has weighed on precious metals, making dollar-priced bullion more expensive for buyers using other currencies. Expectations that US interest rates could remain elevated have also pressured gold and silver, which do not offer interest income.
Investors are awaiting the Federal Reserve’s October 28 policy decision and guidance for the coming months. Any indication that inflation could delay monetary easing or lead to higher rates later could influence bullion prices.
Rising oil prices add to inflation concerns
Crude oil prices rose on Wednesday (October 28) after Yemen’s Iran-aligned Houthi group said it had attacked Saudi Arabia’s largest oil refinery. Saudi authorities had not immediately confirmed the reported strike, Reuters reported.
Brent crude futures gained 1.3% to $115.36 per barrel, while US West Texas Intermediate crude rose 1.22% to $101.12 as of 1:40 am GMT.
Sustained increases in oil prices can push up inflation and strengthen expectations of higher interest rates, potentially weighing on gold. However, escalating geopolitical tensions can also support safe-haven demand for the metal, leaving prices sensitive to developments in the West Asia.
Silver faces industrial-demand concerns
Silver has additional exposure to changes in industrial demand because of its use in manufacturing and other industrial applications.
Gaurav Garg, head of research at brokerage platform Lemonn, said silver was facing stronger selling pressure below $54 per ounce, with concerns about industrial demand contributing to the weakness.
Gold and silver prices in India
The All India Sarafa Association reported the following prices in New Delhi on Tuesday, October 27:
| Precious metal | Price | Daily change |
|---|---|---|
| Gold (99.9% purity) | ₹1.45 lakh per 10 grams | Down ₹500 |
| Silver | ₹1.98 lakh per kg | Down ₹4,000 |
The prices include applicable taxes. Domestic bullion rates may differ from international prices because of currency movements, import costs, duties and local market conditions.
Gold and silver outlook
Prithviraj Kothari, managing director of RiddiSiddhi Bullions Ltd. and president of the India Bullion and Jewellers Association, said gold could decline towards $3,950 per ounce and silver towards $50 per ounce.
He also said both metals were building a base, with a potential 10-15% rebound. This remains a market outlook rather than a guaranteed recovery.
For investors, the key factors to track are the Federal Reserve’s policy guidance, the dollar’s movement, crude oil prices and geopolitical developments. Silver prices will also depend on the outlook for industrial demand.
Gold and silver prices: FAQs
Is gold a good investment when prices are falling?
A price decline alone does not establish whether gold is a good investment. Investors should consider their investment horizon, portfolio allocation, liquidity needs and the risks associated with short-term price volatility.
Why can gold prices in India move differently from international prices?
Indian gold prices are influenced by international bullion rates, the rupee-dollar exchange rate, import costs, applicable duties and taxes, and domestic market conditions. Consequently, a fall in international prices may not translate into an identical percentage decline in Indian markets.
-With Reuters inputs