On the Multi Commodity Exchange (MCX), gold futures for October delivery fell ₹773, or 0.5%, to ₹1.53 lakh per 10 grams. Silver futures for December delivery declined ₹2,024, or 0.84%, to ₹2.39 lakh per kg.
Globally, gold futures were down 0.53% at around $4,355.59 an ounce, while silver was trading 0.20% lower at $66.12 an ounce.
Why are gold and silver prices falling?
The latest decline comes as investors reassess the outlook for US interest rates, bond yields and the dollar.
According to Gaurav Garg, head of research at Lemonn, precious metals remain under pressure as hawkish commentary from the US Federal Reserve and inflation concerns have kept yields and the dollar firm.
“Gold and silver are under pressure as hawkish Fed commentary and elevated inflation concerns keep yields and the dollar firm, despite continued Middle East geopolitical tensions supporting safe-haven demand,” Garg said.
The dollar and US Treasury yields are important for international bullion prices because higher yields can reduce the relative appeal of non-yielding assets such as gold. Geopolitical tensions, on the other hand, can support demand for gold as a safe-haven asset.
Domestic prices are also influenced by the rupee.
Garg noted that the dollar was around 95.87 against the rupee, while crude oil was close to $100 a barrel. For Indian buyers and investors, movements in the rupee can affect the domestic price of internationally traded commodities.
Gold has recovered, but volatility remains high
The latest decline follows a recovery in domestic bullion prices last week.
Vikram Subburaj, CEO of Giottus.com, said Friday’s session had seen gold gain 0.84% to ₹1.54 lakh per 10 grams, while silver had settled around ₹2.42 lakh per kg.
However, Subburaj cautioned that the rebound should not automatically be interpreted as a return to the earlier uptrend.
“Investors should be cautious about treating this as a clear return to the earlier uptrend,” he said, pointing to the sharp movements in both metals during recent sessions.
For Indian investors, he said global bullion prices are only one part of the equation. The rupee is another important factor, since a weaker rupee can support domestic bullion prices when international prices rise.
Crude oil prices and geopolitical developments could also influence sentiment, while US Treasury yields and the dollar remain key factors to watch, Subburaj said.
What does this mean for gold buyers during the festive season?
Despite the volatility in bullion prices, physical demand in India remains present, although buyers are becoming more selective at elevated price levels.
Darshan Desai, CEO of Aspect Bullion & Refinery, said physical demand is “steady but measured”, with buyers watching prices closely. He expects festive-season buying interest to gradually increase as consumers and jewellery retailers prepare for the upcoming period.
However, buyers may spread their purchases over time rather than make large purchases at once, he said.
The festive and wedding seasons are important periods for India’s jewellery market, but high gold prices can influence the quantity consumers buy. Instead of necessarily reducing spending altogether, consumers may adjust the weight, design or timing of purchases.
Bindu Sharma, founder and creative director of Mavitrra, said elevated prices are making consumers more mindful about the weight and value of jewellery, while demand remains linked to occasions such as festivals, weddings and gifting.
She also said younger consumers are increasingly looking at gold and silver jewellery not only for their intrinsic value but also as an expression of personal style.
What should investors watch now?
The immediate direction of gold and silver prices is likely to remain sensitive to US interest-rate expectations, the dollar, bond yields, crude oil prices and geopolitical developments.
Subburaj said investors should avoid chasing sharp rebounds and that those looking to build long-term exposure could consider staggered purchases. He also cautioned that leveraged traders need to account for the recent volatility and manage position sizes carefully.
-With agencies inputs