Gold and Silver Price Today: Gold and silver are cheaper abroad; will festive demand provide support to domestic prices?
Gold and Silver Prices Today: Gold and silver prices saw a decline in early trading across Asian markets. Expectations of a tighter monetary policy in the US exerted downward pressure on prices, while geopolitical uncertainty and seasonal buying in India provided some support. On the COMEX, gold futures fell by $14.10, or 0.34%, to $4,128.50 per ounce, down from the previous close of $4,143.40 per ounce. According to market data from October 21, silver futures dropped by $0.30, or 0.52%, to $57.70 per ounce, compared to the previous close of $58.155 per ounce.
The short-term outlook for bullion is caught between opposing forces: on one hand, expectations of higher interest rates in the US and elevated energy prices; on the other, central bank buying, geopolitical risks, and demand in India driven by the festive and wedding season.
Why US interest rate expectations matter
Gold does not yield interest, making it less attractive when bond yields and interest rates rise. Consequently, expectations of further tightening by the Federal Reserve could weigh on prices—especially if inflation persists and the US dollar strengthens.
Vikas Gupta, CEO and Smallcase manager at Omniscience Capital, noted that the potential for rising inflation and interest rates, alongside the recent upward trend in gold prices, presents a challenge for the market outlook.
While central banks may remain significant buyers, Gupta suggested that selling by other investors could offset some of this demand, potentially keeping prices in check. They expect gold prices in India to see a slight uptick during the festive season before stabilizing, while global prices may remain under pressure amid the possibility of further interest rate hikes by the Federal Reserve.
The interest rate outlook remains a critical variable for the bullion market. A Reuters poll published on October 20 indicated that economists expected the Fed to hold rates steady during its October 27–28 meeting, with another hike anticipated in December. Persistent inflation and high energy costs were among the concerns shaping these expectations.
Why aren't geopolitical tensions driving up gold prices?
While geopolitical risks can bolster gold’s appeal as a "safe-haven" asset, their impact is not always straightforward. Tensions that disrupt oil supplies can drive up crude oil prices, which in turn may heighten inflation concerns and reinforce expectations that interest rates will remain high.
Vikram Kasat, Chief Business Officer – Advisory and Dealing at PL Capital, noted that with Brent crude hovering near $108 per barrel, rising geopolitical uncertainty poses a risk to both inflation and corporate profit margins.
For gold and silver, the outcome depends on which force prevails: the demand for safe-haven assets, or the pressure exerted by higher yields and a tighter monetary policy.
Will festive demand support domestic gold prices?
India’s festive and wedding season could provide support to domestic gold prices, although high price levels might reduce the volume of jewelry purchased by consumers. Rajeev Sharan, Head of Research at Brickwork Ratings, noted that around the time of Dussehra, 24-karat gold was trading at approximately ₹1.48 lakh per 10 grams—a decline of over 6% from the record highs seen the previous month. He expects that higher interest rates in the US will temper the rally, with prices likely to fluctuate within a range of about 5% in either direction in the near term.
Sharan also pointed to a shift in purchasing patterns: while maintaining their festive budgets, households are opting for lightweight jewellery or diversifying their purchases into gold coins, bars, and exchange-traded funds (ETFs).
Recent market trends indicate that lower prices have helped revive demand for jewellery in India. On October 20, the World Gold Council stated that seasonal demand is gaining momentum, domestic gold-market discounts have narrowed, and jewellers are reporting a healthy flow of orders ahead of the festive and wedding season. It also noted, however, that elevated price levels could continue to constrain growth in the volume of purchases.
Colin Shah, Managing Director of Kama Jewellery, observed that during Dussehra, there was heightened interest in lightweight jewellery and 9-karat pieces, alongside demand for diamond-studded jewellery. These preferences illustrate how buyers are adjusting their purchasing choices to manage expenditure without forgoing their festive shopping.
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