Gold and silver prices continued to face selling pressure on Thursday, October 29, as investors assessed the US Federal Reserve’s latest interest rate decision and awaited fresh inflation data for clues on the outlook for monetary policy.
On the Multi Commodity Exchange (MCX), December gold futures were trading at ₹1.43 lakh per 10 grams, down 0.28%. December silver futures declined more sharply, falling 1.18% to ₹1.92 lakh per kg.
The decline comes amid uncertainty over the US Federal Reserve’s policy outlook, with investors weighing inflation risks and the possibility of further monetary tightening.
Why are gold and silver prices falling?
Fed decision fails to provide sustained support
The US Federal Reserve kept its policy interest rate unchanged at 3.75%-4.00%. However, the decision did not provide sustained support to precious metals, as two Fed officials favoured an interest rate increase, keeping the possibility of further tightening in focus.
Higher interest rates can weigh on gold, which does not generate interest income, by increasing the relative attractiveness of interest-bearing assets.
Investors are now awaiting US personal consumption expenditures (PCE) inflation data, a key indicator watched by the Federal Reserve, for clues on the central bank’s next policy move.
Silver faces steeper selling pressure
Silver is declining more sharply than gold in Thursday’s session. While both metals are sensitive to changes in interest rate expectations and the US dollar, silver can also be more volatile because of its industrial demand exposure and relatively higher sensitivity to shifts in investor sentiment.
According to Gaurav Garg, Head of Research at Lemonn, silver’s steeper decline highlights its greater vulnerability to selling pressure.
What should investors watch next?
The next major trigger for precious metals is the US PCE inflation report. The data could influence expectations around the Federal Reserve’s future interest rate decisions and, in turn, the direction of gold and silver prices.
Investors will also track movements in the US dollar and Treasury yields, which can influence demand for non-yielding assets such as gold.
For domestic investors, the latest MCX prices indicate continued weakness in both metals, with silver under greater pressure. However, prices can remain volatile as markets respond to incoming economic data and changing expectations around US monetary policy.
What does this mean for gold and silver buyers?
For jewellery buyers and those purchasing gold and silver coins or bars, short-term price declines may affect buying decisions, but prices can fluctuate further.
Samit Guha, Managing Director and CEO of MMTC-PAMP, said consumer interest in gold and silver, particularly bars and coins, is expected to remain resilient during the festive season because of their cultural significance and the upcoming wedding season.
He added that elevated gold prices could encourage consumers to opt for smaller-denomination bars and coins, while convenience may support interest in digital gold, particularly among younger investors.
However, retail buyers should distinguish between short-term price movements and their own purchase requirements rather than treating a single-session decline as a signal that prices have bottomed out.
NOTE TO READERS
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.