Gold and silver prices fell on the Multi Commodity Exchange of India (MCX) on Tuesday, October 27, as investors remained cautious ahead of the US Federal Reserve’s policy decision.
A stronger US dollar, interest-rate expectations and selling pressure following last week’s sharp decline have weighed on sentiment.
MCX December gold futures were trading 0.46% lower at ₹1.42 lakh per 10 grams, while December silver futures declined 1.15% to ₹1.93 lakh per kg.
Why are gold and silver prices falling?
US Fed policy uncertainty
Investors are assessing the outlook for US interest rates ahead of the Federal Reserve’s policy decision. Expectations of interest rates remaining elevated can weigh on gold, which does not generate interest income. A stronger US dollar can also make dollar-denominated bullion more expensive for buyers using other currencies.
Internationally, gold has struggled to sustain the $4,000-per-ounce level, while silver has faced additional pressure amid concerns about industrial demand.
Selling pressure after last week’s decline
Both metals are attempting to stabilise after last week’s sharp sell-off, but the recovery remains fragile. PTI reported that weak spot demand weighed on gold futures, while reduced positions by market participants pressured silver.
What price levels should investors watch?
Vikram Subburaj, CEO of Giottus.com, identified the following levels for domestic bullion futures:
Gold: Support at ₹1.42 lakh per 10 grams. A sustained move above ₹1.43 lakh per 10 grams could improve the near-term outlook.
Silver: Support at ₹1.92 lakh per kg. A move above ₹1.97 lakh per kg could indicate improving momentum.
Subburaj said the current recovery was modest and did not yet confirm a trend reversal. He advised investors to monitor global cues and avoid chasing short-term price movements amid elevated volatility.
How could the dollar and rupee affect prices?
Vikram Kasat, Chief Business Officer – Advisory and Dealing at PL Capital, flagged crude oil prices and a rupee trading near ₹95 against the US dollar as concerns for Indian markets.
Since India imports bullion, a weaker rupee can increase the domestic cost of gold and silver, even when international prices are unchanged. Dollar movements and global bond yields will also remain important drivers of precious metals.
What should investors watch next?
The Federal Reserve’s policy decision, its guidance on interest rates and movements in the US dollar will be key near-term triggers for bullion. Investors will also track whether gold and silver hold their identified support levels.
The recent rebound does not yet establish a sustained recovery. Investors should distinguish short-term price movements from their investment horizon and account for the volatility of precious metals before making decisions.
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.