Gold and silver prices declined in global markets on Thursday, October 22, as fresh geopolitical tensions in the West Asia pushed crude oil prices higher, adding to concerns about inflation and the outlook for monetary policy.
COMEX gold futures were trading at $4,129.60 per ounce, down $20.40, or 0.49%, from the previous close of $4,159 an ounce. Silver futures fell $0.665, or 1.15%, to $57.045 per ounce, compared with the previous close of $58.095 an ounce, according to the latest available market data on October 22.
Crude oil prices rose after further attacks by Yemen’s Iran-aligned Houthi group in Saudi Arabia prompted the United States to order some diplomats and their family members to leave its missions in the Kingdom.
Brent crude futures rose 1.2% to $110.11 a barrel, while US West Texas Intermediate crude gained 1% to $98.12 at 00:34 GMT.
Elevated crude oil prices can add to inflationary pressures, potentially complicating central banks’ decisions on interest rates. This can weigh on precious metals, which do not offer interest income.
However, gold and silver prices can also respond to geopolitical uncertainty, movements in the US dollar and bond yields, making the overall impact of developments in the West Asia difficult to predict.
Gold, silver prices in India
In the domestic market, gold and silver prices declined in India on Wednesday, October 21, amid a stronger rupee, elevated crude oil prices and weak global trends.
According to the All India Sarafa Association, gold of 99.9% purity fell ₹1,300 to ₹1.49 lakh per 10 grams, inclusive of all taxes. Silver declined ₹1,600 to ₹2.13 lakh per kilogram.
The rupee appreciated 48 paise to close at 94.43 (provisional) against the US dollar on Wednesday (October 21), supported by Reserve Bank of India intervention to contain dollar demand. A stronger rupee can make dollar-denominated gold and silver cheaper for Indian buyers, all else being equal.
In global spot markets on Wednesday, gold was quoted at $4,127.68 per ounce, while silver declined 0.48% to $57.72 per ounce.
What should investors watch?
Investors will likely track movements in crude oil prices, developments in the West Asia, the US dollar and Treasury yields for cues on precious metals.
Developments in the US Federal Reserve’s monetary policy outlook will also be important. Higher interest rates can weigh on gold and silver by increasing the opportunity cost of holding non-yielding assets, while expectations of lower rates can support demand.
For Indian buyers, movements in the rupee will remain another important factor alongside international prices, import-related costs and domestic taxes.
-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.