Gold-Silver Price: Gold slips below $4,300 abroad; silver drops 2.5%..

Gold and Silver Prices: Prices of gold and silver faced downward pressure in the international market on Monday (September 28). Rising oil prices, a strong US dollar, and higher bond yields dampened demand for non-interest-bearing assets like gold and silver. According to market data, COMEX gold fell 1.57% to $4,253.40 per ounce, while COMEX silver dropped 2.76% to $63.01 per ounce. This decline follows the losses both precious metals recorded last week.

Last week, COMEX gold futures for December delivery closed at $4,321.20 per ounce, down $103.70 (2.34%), while silver fell $2.35 (3.5%) to settle at $64.80 per ounce.

Trends in India

In the domestic market, MCX gold futures for October delivery fell by approximately 2.3% last week, closing near ₹1.5 lakh per 10 grams. Silver futures dropped 3% to ₹2.34 lakh per kilogram.

Why the downward pressure on prices?

A primary reason for the pressure on prices is the shift in expectations regarding US interest rates. Markets are factoring in the possibility of another interest rate hike by the Federal Reserve in October. Higher interest rates and bond yields make non-interest-bearing assets like gold and silver less attractive.

US Treasury yields have also risen, with the 30-year yield approaching levels not seen since 2004. The rise in long-term yields has exerted pressure on bullion prices.

2) The US dollar is another key factor. The dollar index has risen to around 101.39, marking its highest level in two months. A strong dollar can dampen demand for dollar-denominated commodities, including gold.

Jatin Trivedi, VP – Commodity and Currency Research Analyst at LKP Securities, said, "Gold prices witnessed significant volatility last week. It traded within the ₹1.50–1.54 lakh per 10 grams range and closed with a decline of over 2%. Profit-booking from higher levels persisted as the market factored in the possibility of further interest rate hikes by the Fed in October."

He added that the dollar index sustaining above the 101 mark could exert further pressure on gold.

**Impact of Geopolitical Tensions on Prices**

Geopolitical tensions remain a key factor, though their impact on gold is currently being weighed against the pressure stemming from high yields and a strong dollar.

Tensions between the US and Iran, along with incidents around the Strait of Hormuz, have driven up crude oil prices. On Monday (September 28), Brent crude rose 1.6% to $106 per barrel, while US crude futures climbed 1.1% to $93.47 per barrel.

High crude oil prices could stoke inflation concerns. This might influence expectations regarding interest rate trajectories and keep bond yields elevated, creating further headwinds for bullion.

At the same time, geopolitical uncertainty could provide support for gold's 'safe-haven' appeal. This implies that bullion prices could remain sensitive to developments in both the geopolitical and interest rate arenas.

**What should investors do now?**

The US economic data calendar is packed. This week will see the release of data on consumer confidence, GDP, PCE inflation, and manufacturing, as well as the September non-farm payroll report. Comments from Federal Reserve officials will also be closely monitored.

The US jobs report will be particularly crucial for interest rate expectations. Labor market data that is stronger than expected could reinforce expectations of a tight monetary policy, potentially putting further pressure on gold. Conversely, weak data could have the opposite effect, dampening expectations for further interest rate hikes.

Trivedi stated, "Market sentiment remains cautious, and volatility is likely to stay high as the market focuses on the upcoming US non-farm payroll and unemployment figures. These data points will be pivotal in shaping expectations regarding the Federal Reserve's policy decision in October."

Pranav Mer, Senior Vice President – ​​EBG (Commodity and Currency Research) at JM Financial Services, noted that selling pressure persisted on gold futures last week; meanwhile, silver prices also closed lower amidst consolidation and correction in industrial metals.

**Outlook for the Indian market**

Fluctuations in the rupee will also be significant for Indian investors, given that international bullion prices are denominated in dollars. When translating a drop in international gold prices into domestic rates, a weakening rupee can partially offset the decline, whereas a strengthening rupee can have the opposite effect.

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