Gold and silver prices remained under pressure on October 23 amid selling in global stock markets and crude oil prices reaching $ 117 per barrel.
The price of silver in the domestic market slipped below Rs 2 lakh per kg.
In the global market, the future price of gold on Comex was trading around $ 4,030 an ounce, while silver was around $ 54 an ounce.
In the domestic market, the futures price of gold on Multi Commodity Exchange (MCX) was trading around Rs 1,42,300 per 10 grams and the futures price of silver was trading around Rs 1,96,000 per kg.
This is the second consecutive week when gold prices have fallen.
"Gold prices are being weighed down by concerns about oil prices, interest rates and the Fed's stance. Additionally, investment in the market has also been negative," Ryan Mackey, senior commodities strategist at TD Securities, told Bloomberg.
Bloomberg has written, "Precious metal prices are expected to fall by four percent this week." This would be its biggest weekly decline since the beginning of June. According to Mackay, gold is currently vulnerable to widespread selling by risk-averse investors.
According to him, “Renewed tensions in the Middle East have pushed energy prices up again, while investors are turning to US bonds as they move out of stocks of artificial intelligence companies. As a result, yields on US Treasury bonds have increased, putting pressure on gold. "Typically, rising bond yields lead to weakening of gold prices."
The impact of gold's weakness has not been visible in one part of the market. That is the holding of gold in Exchange Traded Fund i.e. ETF.
The gold ETFs tracked by Bloomberg have seen gold inflows for the past 14 consecutive weeks. This trend is in complete contrast to the decline in gold prices.
“Long-term investors continue to accumulate gold through ETFs to hedge against geopolitical risks and declining purchasing power of the currency,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, wrote in a note.
On Friday, silver prices had fallen by 7.5 percent. The price of silver has fallen by Rs 56,000 from the high of Rs 2,48,800 per kg in August.
The price of silver has fallen by more than half from its record high of Rs 4,20,048 per kg.
This sharp decline comes after a 170 percent surge in silver prices in 2025. A huge decline has also been recorded in the prices of gold. Gold has become cheaper by Rs 23,000 from the highest level of Rs 1,64,773 per 10 grams in August.
Due to rising oil prices, inflation concerns remain and fears of interest rate hike have intensified.
"We believe the recent weakness is driven by rising yields on US Treasury bonds, a stronger dollar and renewed inflation concerns as Brent crude prices rise above $110 a barrel," Naeem Aslam, chief investment officer at Zay Capital Markets, said in a note.
Gold prices are also under pressure due to higher bond yields and the strengthening US dollar.
This reduces the attractiveness of holding precious metals like gold, as they do not yield regular interest income.
Gold still costlier than last year
Kumar Jain, Secretary of India Bullion and Jewelers Association, says that compared to last year, people have got good returns in gold. Due to this there is hope among investors.
He told news agency ANI, “...the festival season is going on. Dhanteras and Diwali are near, so people are shopping heavily. The practice of recycling gold has also increased significantly.”
According to him, last year the price of gold on Dussehra was Rs 1,16,000 per 10 grams, whereas this year on the occasion of Dussehra its price was Rs 1,49,000 per 10 grams.
Kumar Jain says, “This increase in prices has increased the confidence of investors.”
He said, "The wedding season is also coming and people are buying gold to make jewellery. This is a major reason for the increase in demand."
However, he said that people's experiences with silver have been very bad.
what will happen in future
However, buying by central banks and strong demand in gold exchange traded funds (ETFs) kept gold's losses limited.
"The market is trying to strike a balance between buying demand for gold and pressure from higher interest rates. Selling pressure has eased somewhat, but current buying demand is not strong enough to provide a new direction for prices," Lin Tran, market analyst at XS.com, said in a note.
Aslam said that due to the important role of silver in industrial use, weakness in manufacturing activities also affects its prices, due to which there is additional pressure on it.
He said Zay Capital expects the direction of silver prices to depend on whether the recovery in industrial demand and the constraints on physical silver supply can offset the downward pressure from the tightening stance of US monetary policy.
Fawad Razakzada, market analyst at Forex.com, said in a note that inflation has a double impact on gold.
"In theory, a sustained price rise should increase demand for gold as a safe-store of value," he said.
"But if inflation persists long enough for central banks to maintain a tight monetary stance, it could result in real and nominal interest rates rising, reducing the attractiveness of gold somewhat."
impact of oil prices
Oil prices affect gold and silver mainly indirectly. Its effect is visible through inflation, interest rates and economic growth.
However, there is no fixed rule that if oil becomes expensive then the prices of precious metals will fall.
When oil becomes expensive, it increases the cost of fuel, transportation and production. The market is beginning to worry that inflation may remain at high levels for a long time.
Investors think central banks will cut interest rates lower or keep them higher for a longer period. In such a situation, the return on bonds increases. This may reduce the attractiveness of gold, because gold does not earn interest.
There is another situation also. Investors may turn to gold as a safe investment option as concerns over inflation and geopolitical tensions increase due to a sharp rise in oil prices.
In such a situation, if the pressure to increase interest rates remains limited, then gold prices may strengthen.
Silver is a precious metal as well as an industrial raw material. It is used in electronics, solar panels and other manufacturing sectors. The share of industrial use in the total global silver demand in the year 2024 was about 56 percent.
Therefore, if a surge in oil prices increases production costs and weakens manufacturing activity, an additional concern for silver could be a decline in industrial demand.
When markets fear both tighter monetary policy and slower economic growth, silver prices may come under greater pressure relative to gold.
