On COMEX, gold was trading at $4,369.40 an ounce, down $37.90, or 0.86%, from the previous close. The contract touched a high of $4,380.70 and a low of $4,351.30 an ounce.
Silver was under greater pressure, with COMEX silver trading at $63.91 an ounce, down $1.017, or 1.57%. The session high stood at $64.32 an ounce, while the low was $63.71 an ounce.
Why are gold and silver prices falling?
One of the key factors weighing on bullion is the sharp rise in crude oil prices. Brent crude moved above $108 a barrel on Friday (September 10), while US West Texas Intermediate (WTI) crossed $103 a barrel after both benchmarks gained more than 6% in the previous session.
Higher oil prices can add to inflationary pressures and, in turn, complicate expectations around US monetary policy. Higher bond yields and interest rates tend to reduce the appeal of non-yielding assets such as gold.
“Recovery in oil prices is seen exerting pressure again on gold,” said Vedika Narvekar, Research Analyst – Commodities & Currencies, Anand Rathi Share and Stock Brokers.
Narvekar said gold had largely remained in a tight range around $4,400 an ounce as markets awaited greater clarity on the Fed’s next move. She expects international gold prices to remain between $4,340 and $4,450 an ounce, while MCX gold could trade in the ₹1.51 lakh-₹1.55 lakh per 10 grams range.
Dollar, ETF flows offer some support
The fall in bullion prices comes despite some supportive factors. A weaker US dollar has helped gold in recent sessions, while strong inflows into gold ETFs have reinforced investor demand.
Narvekar noted that global gold ETFs attracted $18 billion in August, their second-largest monthly inflow on record, taking global holdings up by 121 tonnes to a record 4,189 tonnes.
Prithviraj Kothari, Managing Director, RiddiSiddhi Bullions Ltd., President, India Bullion and Jewellers Association (IBJA), and Chairman, Jain International Trade Organisation, said the softer dollar, fiscal concerns in the US and elevated geopolitical risks continued to provide a floor for gold.
However, he cautioned that a hotter-than-expected US inflation reading could put further pressure on bullion through higher yields. Kothari expects gold to remain broadly in the $4,300-$4,500 an ounce range and said silver could have more upside if it sustains above $67 an ounce.
Why crude matters for Indian bullion prices
The rise in oil prices is particularly relevant for Indian markets because it can affect both inflation expectations and the rupee.
Gaurav Garg, Head-Research, Lemonn, said higher crude prices and a weaker rupee remained key risks for Indian inflation and MCX commodities. At the same time, he noted that softer-dollar conditions continued to support precious metals.
In his September 10 market assessment, Garg had pegged gold at around $4,414 an ounce and silver at $67.50 an ounce, while highlighting the impact of rising crude and US rate expectations on the bullion market.
The rupee was around ₹95.10-₹95.25 per US dollar in the latest market commentary. A weaker rupee can support domestic gold and silver prices because imported bullion becomes costlier in rupee terms.
Silver remains more volatile
Silver has been seeing sharper moves than gold, with the metal falling 1.57% on Friday (September 10) against gold’s 0.86% decline.
Vikram Subburaj, CEO, Giottus.com, said silver had outperformed gold in the latest MCX session, although the sharp fall in open interest suggested that short covering had contributed to the rally.
He said gold was testing the ₹1.54 lakh-per-10-gram area, while silver was around ₹2.44-₹2.45 lakh per kg in the latest MCX session.
According to Subburaj, silver is likely to remain significantly more volatile, with the immediate market setup driven by headlines and US inflation data.
What next for gold and silver?
The next major trigger for bullion markets is US inflation and its potential impact on the Fed’s policy path.
A hotter inflation reading could push US bond yields higher and limit the upside in gold and silver. A softer reading, on the other hand, could revive expectations of easier monetary policy and support bullion.
For Indian investors, the global bullion trend, crude oil prices, US yields and the rupee will therefore remain important factors to watch.
For now, the outlook remains range-bound but volatile, with silver likely to see larger price swings than gold.
-With Reuters inputs
