- Gold and silver face volatility amid inflation data and US Federal Reserve signals this week
- Bullion prices dropped over 4% last week due to a stronger dollar and rising bond yields
- Key economic indicators from India, US, Britain, Japan, and Eurozone will influence markets
Gold and silver face another volatile week as investors assess inflation data, US Federal Reserve signals and geopolitical developments in West Asia.
After shedding more than 4% last week, bullion prices remain under pressure from a stronger dollar and rising bond yields, with analysts expecting economic indicators and interest rate expectations to dictate market direction.
The week's economic calendar is packed with key indicators, including inflation data from major economies such as India, the US, Britain, Japan and the Eurozone. Investors will also examine the latest FOMC minutes and remarks by US Federal Reserve policymakers for clues about the central bank's interest rate trajectory.
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China's industrial output figures will also be in focus, particularly for silver, whose prices are influenced by both investment demand and industrial consumption.
Geopolitical developments in West Asia could further influence bullion prices. Any escalation in tensions between Washington and Tehran may push crude oil prices higher, adding to global inflationary pressures and complicating the outlook for monetary policy.
"The near-term outlook remains cautious to bearish, with volatility expected to stay elevated. On the domestic front, MCX prices will also remain influenced by rupee movements and international bullion trends," said Jateen Trivedi, research analyst at LKP Securities.
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Bullion prices ended the previous week on a weak note, with both precious metals registering significant declines in domestic and international markets.
On the Multi Commodity Exchange, gold futures for December delivery fell Rs 5,847 or 4.10% during the week to settle at Rs 1.36 lakh per 10 grams. Silver futures declined by Rs 8,791, or nearly 5%, to close at Rs 1.76 lakh per kg.
Trivedi attributed gold's weekly decline to a stronger US dollar, elevated Treasury yields and persistent inflation concerns, which reduced the appeal of non-yielding assets.
In international markets, December gold futures on the Comex dropped by $188.6, or nearly 5%, over the week to settle at $3,886.3 per ounce. Silver futures declined by $2.82, or 5.43%, to end at $49.12 per ounce.
Pranav Mer, senior vice president, EBG - commodity and currency research at JM Financial Services, said gold futures traded within a narrow range on Friday but still recorded weekly losses of more than 4% as the US dollar and global bond yields strengthened. Silver also extended its corrective movement, ending the week with losses exceeding 5% and slipping below the $49-per-ounce mark.
Mer said precious metals came under pressure initially following hawkish remarks from Federal Reserve officials and subsequently after inflation readings from the US and other regions came in higher than expected.
Meanwhile, the World Gold Council said exchange-traded fund investors had remained largely on the sidelines during the current quarter following record inflows in the third quarter of 2026. Central banks, however, continued to be net buyers of gold, although demand for coins and bars weakened.
Rajeev Sharan, head of research at Brickwork Ratings, said gold had entered a consolidation phase following its strong rally earlier this year.
A stronger dollar and changing interest rate expectations have added to the pressure on bullion, with market expectations of a December rate hike rising to nearly 90%, he said.
Sharan expects international gold prices to trade between $3,850 and $4,000 per ounce in the near term. In India, wedding-season demand and continued purchases by central banks could provide some support.
While interest rate concerns may restrict gains in the immediate term, sustained physical demand and central bank purchases are likely to remain important factors supporting gold's longer-term outlook, he added.
(With inputs from PTI)
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