Gold and silver prices traded lower on the Multi Commodity Exchange (MCX) on Wednesday, October 28, as investors remained cautious ahead of the US Federal Reserve’s policy decision.
The outlook for interest rates, the US dollar, Treasury yields and inflation remains central to the near-term direction of bullion prices.
For consumers planning gold purchases during the festive and wedding seasons, price volatility is another factor to consider. However, domestic gold prices also depend on the rupee-dollar exchange rate, import costs and local market premiums, apart from international bullion prices.
Gold and silver prices today
As per the latest prices available, December gold futures on the MCX were trading at ₹1.44 lakh per 10 grams, down 0.04%. December silver futures stood at ₹1.95 lakh per kg, lower by 0.54%.
Internationally, spot gold reached $4,055.14 per ounce on October 27, while US December gold futures traded at 0.9% higher at $4,074.60, according to Reuters.
Softer oil prices had eased some inflation concerns, but investors remained cautious ahead of the Fed decision and US personal consumption expenditures (PCE) inflation data due on October 29.
Why are gold and silver prices volatile?
The Federal Reserve’s policy announcement is a key near-term trigger for bullion. Its guidance on future interest rates could influence the US dollar and Treasury yields, both of which affect gold prices.
Gold does not pay interest. When yields on interest-bearing assets rise, the opportunity cost of holding gold can increase, potentially weighing on demand. Conversely, falling yields and expectations of easier monetary policy can support the metal.
Gaurav Garg, Head of Research at Lemonn, said gold and silver are facing renewed pressure as investors assessed the Fed’s policy outlook and the implications of elevated energy costs for inflation.
Gold has struggled to build on its recent recovery above $4,000 an ounce, while silver has faced sharper pressure. Silver’s industrial uses make it more sensitive than gold to expectations for industrial demand and broader metals-market conditions.
Oil prices and currency movements are also relevant. Renewed concerns about a possible US-Iran escalation and risks to West Asian energy infrastructure have supported crude oil prices, according to Garg.
Higher oil prices can complicate the inflation outlook and affect expectations for interest rates.
The rupee has also weakened towards ₹95.18 per dollar, Garg said, with oil-related import demand contributing to pressure on the currency. A weaker rupee can raise the landed cost of imported gold in India, even when international prices are stable or declining.
Could the US midterm elections affect gold prices?
The US midterm elections scheduled for November 3 could add another source of volatility to financial markets, including gold, the dollar and equities.
Ross Maxwell, Chief Strategy Officer at VT Markets, said the election outcome could influence expectations for fiscal policy, inflation and interest rates. A divided Congress could limit major fiscal expansion and ease upward pressure on Treasury yields, potentially supporting gold if yields stabilise or decline.
However, an unexpected Republican sweep could raise concerns about fiscal expansion, government deficits and Treasury issuance. If this pushes yields higher, gold could face pressure. The eventual market reaction will depend on the election outcome and how it affects borrowing costs and broader financial conditions.
Maxwell also noted that gold continues to receive support from central bank purchases and geopolitical uncertainty, although persistent inflation and elevated real yields could limit its recovery.
What are the key MCX levels to watch?
According to Vikram Subburaj, CEO of Giottus.com, the immediate technical levels for December gold and silver futures are:
- Gold: Support at ₹1.42 lakh per 10 grams. A sustained move above ₹1.44 lakh per 10 grams could strengthen the recovery.
- Silver: Support at ₹1.91 lakh per kg. A move above ₹1.97 lakh per 10 grams could improve near-term momentum.
These levels are based on the October 27 trading ranges cited by Subburaj. They are technical reference points, not guaranteed price floors or targets.
What should festive-season gold buyers keep in mind?
For people planning purchases around Dhanteras, Diwali or weddings, short-term movements in MCX futures do not translate directly into the final retail price of jewellery or coins.
Retail prices depend on the local gold rate, purity, making charges, applicable taxes and jeweller-specific premiums. Silver products can also carry varying making charges and premiums.
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.