- Gold and silver prices expected to remain volatile amid US inflation and geopolitical tensions
- US August CPI data on September 11 seen as key driver for bullion price movements
- Gold futures fell 2.2% to Rs 1.52 lakh; silver futures declined nearly 2% to Rs 2.37 lakh
Gold and silver prices are expected to remain volatile this week, with investors closely tracking US inflation data, crude oil movements and developments in the Iran conflict for signals on the global interest-rate trajectory.
The August US Consumer Price Index data, scheduled for release on September 11, is set to be a key driver for bullion prices as investors assess its potential impact on the Federal Reserve's interest-rate decisions.
"US inflation data will be the crucial trigger for bullion markets as uncertainty over the interest-rate outlook remains elevated," Pranav Mer, senior vice president, EBG - commodity & currency research at JM Financial Services, said.
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Investors will also track inflation data from Germany and China, along with GDP readings from the Eurozone, Japan and the UK, and China's trade figures for fresh cues on the health of the global economy and demand.
In the domestic market, Mer sees resistance for gold at Rs 1.57 lakh per 10 grams, while maintaining a positive bias on silver as long as prices remain above the Rs 2.31 lakh per kg support level.
Gold futures for October delivery on the Multi Commodity Exchange declined Rs 3,514, or 2.2%, to Rs 1.52 lakh per 10 grams. Silver futures fell Rs 4,786, or nearly 2%, to Rs 2.37 lakh per kg.
"MCX gold remained volatile through the week, with profit booking continuing in the first half after the previous Friday's correction, as the Fed's indication of a possible rate hike weighed on sentiment," Jateen Trivedi, research analyst - commodity and currency at LKP Securities, said.
Internationally, Comex gold futures for December delivery fell $53.3, or nearly 1.2%, over the week to close at $4,476.6 an ounce. Silver also weakened, declining 1.52% to $66.75 an ounce in New York.
According to Mer, gold remained under pressure towards the end of the week after stronger-than-expected US jobs data raised expectations that the Federal Reserve could consider a rate hike later this month.
The changing relationship between geopolitical risks and monetary policy is also influencing investor behaviour.
Gaurav Garg, head of research at Lemonn, said bullion came under selling pressure as geopolitical tensions were increasingly viewed as a potential inflation and interest-rate risk rather than a straightforward trigger for safe-haven buying.
At the same time, dovish comments from Fed Governor Christopher Waller and signs that the Iran escalation could remain contained helped ease rate-hike expectations during the week.
This contributed to a pullback in the US dollar and bond yields, providing some support to bullion.
Silver, meanwhile, witnessed sharper swings as its dual role as a precious and industrial metal leaves it particularly sensitive to changes in interest-rate expectations and global growth prospects, Garg said.
Longer-term support for gold continues to come from central-bank buying.
The People's Bank of China purchased 20 tonnes of gold, marking its 21st consecutive month of purchases, according to World Gold Council data.
Its purchases so far this year have reached 60 tonnes, taking total gold reserves to 2,366 tonnes.
With monetary policy, energy prices and geopolitics all pulling bullion in different directions, analysts expect heightened volatility in gold and silver through the week.
(With PTI inputs)
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