Gold Silver Prices: If you are thinking of buying gold and silver, don’t rush now. Last week, the prices of gold and silver in the bullion market reached sky high. Experts say that the downward trend may continue this week as well. In fact, rising crude oil prices have added to inflationary pressures. At the same time, the eyes of investors around the world are now on the next move of the US Federal Reserve, which will determine the future course of the market.
Gold and silver prices fell head-on on the MCX
Last week there was heavy selling pressure on the local futures market i.e. Multi Commodity Exchange (MCX). Gold for December delivery closed at ₹1.42 lakh per 10 gram, a steep decline of ₹5,768 (nearly 4 per cent). Silver saw a bigger decline than gold. Last week, silver price fell by ₹ 15,087 or 7.14 percent. After this massive decline, silver slipped below the psychological level of ₹2 lakh to ₹1.96 lakh per kg.
The situation was the same in the international market as well. Gold for December delivery on the Comex fell 4.14 percent to $4,007.9 an ounce. The price had fallen to $3,989 at one point in Friday’s trading. At the same time, in the global market, silver also fell about 6 percent to $53.95 an ounce.
The bullion market has been spooked by the rise in crude oil
Several global factors are at work behind this decline in gold and silver. The price of Brent crude has crossed 115 dollars per barrel. The rule is simple – when crude oil is expensive, there is a risk of inflation due to increased cost of transportation and everything else. To control inflation, central banks around the world can keep interest rates high for longer periods of time. When interest rates remain high, investors begin to pull money out of gold and silver and invest it in bonds and the dollar.
According to Jatin Trivedi, research analyst at LKP Securities, gold is not getting support even at lower levels due to US bond yields and dollar strength. Pranav Mer of JM Financial Services says weakness in industrial metals has spoiled silver’s play. Apart from this, the price of silver has reached a very high level, due to which its demand in the market has weakened. This lower demand put upward pressure on prices.
The way forward will be decided in the October 27-28 meeting
Now the question is what will happen next? All eyes are now on the US Federal Reserve meeting to be held on October 27-28. Only from the Fed Chairman’s statement will it be clear whether the gold and silver prices will stabilize at current levels or continue the downward trend in the future.
This week, the market will be watching not only the US Fed but also the decisions of the European Central Bank and the Bank of Japan. Apart from this, US inflation figures, third quarter GDP figures and data related to consumer confidence will also be released. All these statistics will play an important role in determining the direction of the market. Bond yields will rise further against the dollar if the Federal Reserve takes a tighter stance on interest rates. This means that gold and silver prices may fall further. Conversely, if the Fed’s stance remains dovish, precious metals may get some relief from this decline.
