Gold and silver prices edged higher in international markets on Monday, October 19, supported by safe-haven demand and a decline in US Treasury yields, even as investors assessed inflation risks, geopolitical tensions and the outlook for US interest rates.
On COMEX, gold futures rose 0.30% to $4,193.60 per ounce, while silver futures gained 0.51% to $57.60 per ounce in the latest available trade. Gold touched an intraday high of $4,208.40 an ounce, while silver rose to $57.655 an ounce.
The gains follow a sharp correction in domestic bullion prices last week. On the Multi Commodity Exchange (MCX), December gold futures fell 2.4% to around ₹1.47 lakh per 10 grams, while silver futures declined 6.4% to approximately ₹2.11 lakh per kg.
What is supporting gold and silver prices?
Gold has received some support from safe-haven buying as investors assess geopolitical risks, including tensions around the Strait of Hormuz. Concerns over the funding requirements of artificial intelligence infrastructure and a sell-off in technology stocks have also added to market uncertainty.
Lower US Treasury yields have provided another source of support for gold, which does not pay interest. When bond yields fall, the opportunity cost of holding gold can decline, making the metal relatively more attractive to investors.
Prithviraj Kothari, managing director of RiddiSiddhi Bullions and president of the India Bullion and Jewellers Association, said gold and silver had rebounded on safe-haven buying and short-covering as the US dollar index eased from an 18-month high.
However, inflation remains a key risk. Higher-than-expected US producer price inflation has kept expectations of further Federal Reserve tightening in focus. Interest-rate expectations matter for bullion because higher rates can support yields on interest-bearing assets and increase the opportunity cost of holding precious metals.
Why could domestic gold prices move differently from international rates?
Movements in the rupee can influence domestic bullion prices independently of changes in international gold prices.
India imports a significant portion of its gold requirements. A stronger rupee reduces the rupee cost of importing bullion, all else being equal, while a weaker rupee can push domestic prices higher.
Gaurav Garg, head of research at Lemonn, said the rupee’s appreciation had contributed to the recent decline in domestic gold prices. The currency strengthened to around 94.8 per dollar from approximately 96.8, reducing the landed cost of imported gold.
This currency effect can widen the divergence between domestic and international bullion prices. Import costs, duties and other domestic market factors also influence the final price in India.
What should investors watch this week?
Investors will track developments around the Strait of Hormuz, crude oil prices, movements in the US dollar and Treasury yields, and expectations for Federal Reserve policy.
Higher crude oil prices can intensify concerns about energy-driven inflation, potentially complicating the outlook for interest rates. At the same time, heightened geopolitical uncertainty can support demand for gold as a safe-haven asset.
Economic data will also be important. Chinese economic releases could influence industrial demand expectations for silver, while US housing data, consumer sentiment, inflation expectations and purchasing managers’ index readings could shape expectations for interest rates and economic growth.
Commodity markets will remain closed during the morning session on Tuesday, October 20, on account of Dussehra, according to the market update issued on Sunday.
What are the key technical levels for gold and silver?
Kothari said gold could move towards $4,200 per ounce, equivalent to approximately ₹1.51 lakh per 10 grams, if the recovery continues. He said silver needs to hold above $56.30 per ounce, or around ₹2.10 lakh per kg, to target $58.50 an ounce.
These are technical levels cited by the market expert, rather than assured price targets. Bullion prices can remain volatile as currency movements, interest-rate expectations and geopolitical developments shift market sentiment.
-With agencies inputs
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.