Festive Demand, US Inflation Data To Steer Gold Prices This Week: Analysts

Gold prices are expected to remain volatile in the coming week as traders weigh domestic festive demand and physical market premiums to key macroeconomic data release and political developments in the US, analysts said.

Investors will also closely monitor commentaries by Federal Reserve officials, including Chair Jerome Powell, on Tuesday, which will provide more cues on the trajectory of gold prices in the near term.

"In the next week, focus will be on the physical demand for bullion during the festive season in India along with global political and geo-political developments, particularly the passage of the US spending bill and efforts to resume diplomacy on ending the Russia-Ukraine war. These factors are likely to shape gold price trends in the coming months," Pranav Mer, Vice President, EBG - Commodity & Currency Research, JM Financial Services Ltd, said.

Mer noted that gold prices closed yet another week on a positive note, but volatility remained elevated with sharp corrections followed by renewed buying at lower levels. This was expected and will continue as the bulls and bears fight out at market tops.

"There has not been much change on the fundamental side with uncertainty over the US trade tariffs still being in place. President Donald Trump's announcement to levy tariffs on China has again pushed up safe haven demand," he said.

Last week, gold prices rallied by Rs 3,251, or 2.75%, hitting a record of Rs 1,23,677 per 10 grams on Thursday. However, the rally appeared to take a temporary breather towards the week's close on the Multi-Commodity Exchange.

"Gold prices have had an astonishing rally in recent months, with a year-to-date gain of more than 50% in 2025. This prompted investors to take profits on Thursday, triggering a price correction of more than Rs 3,000 from highs of Rs 1,23,677 per 10 grams, which contributed to extreme volatility in the yellow metal," Prathamesh Mallya, DVP- Research, Non-Agri Commodities and Currencies, Angel One, said.

Market observers also cited US monetary policy as a key influence.

Pankaj Singh, Founder and Principal Researcher of SmartWealth.ai, pointed out that minutes from the September Federal Open Market Committee meeting reinforced expectations of a prolonged inflationary bias and balance-sheet reduction, both of which supported gold prices.

On the international front, Comex gold futures for December delivery closed marginally higher at $4,000.4 per ounce, after hitting $4,081 during midweek trading. Spot gold also rose by 1.06% to $4,018.30 per ounce before reaching a record $4,059.34 per ounce.

"The week began with bullion extending gains on safe-haven flows as market hedged against persistent US fiscal risks and speculation surrounding the Federal Reserve's policy path. However, sentiment shifted midweek," Riya Singh, Research Analyst, Commodities and Currency, Emkay Global Financial Services, said.

Despite the short-term cooling, analysts remain constructive on the broader trajectory.

"Gold is still on track for its eighth consecutive weekly advance, up nearly 14% this quarter, reflecting sustained investor preference for tangible assets amid concerns over US debt exceeding $36 trillion, and rising inflation expectations despite slowing economic growth," Singh added.

Physical demand from Asia moderated last week, as high prices deterred fresh buying, particularly in China and India, where import premiums narrowed. The short-term outlook will now hinge on upcoming US inflation readings and Federal Reserve officials' commentary, analysts said.

Meanwhile, silver extended its historic rally, though with elevated volatility. On the MCX, silver prices rose by Rs 722, or 0.49% in the past week, touching an all-time high of Rs 1,53,388 per kilogram on Thursday.

Globally, Comex silver futures for December delivery hit a high of $49.96 per ounce on Friday, while spot silver briefly breached $51 per ounce on Thursday before retreating to close at $50.29 per ounce.

Riya Singh of Emkay Global Financial Services said, "Silver's historic run reached a fever pitch last week, with spot prices climbing to $51.24 an ounce-mark on Thursday, the highest level since 1980, before correcting to around $50 amid intense volatility and supply constraints."

She noted that the white metal remains the standout performer of 2025, posting a remarkable 70% year-to-date gain, driven by industrial demand, speculative interest, and safe-haven flows.

In addition, severe tightness in the London bullion market amplified price swings, with the implied one-month lease rate surging to 11%, the highest since 2022, reflecting a scarcity of lendable silver. Aggressive shipments of bullion to the US amid tariff fears drained London inventories to multi-year lows, flipping usual premiums and discounts of up to $2.50 per ounce versus Comex futures in New York, Riya Singh added.

"Sustained tightness in London and ongoing macro uncertainty could maintain upside momentum, though volatility will likely remain elevated as speculative long positions reach their most extended levels in years," she said.