Gold and Silver Market Outlook: Experts Highlight 3 Key Drivers For Bullion This Week

Gold and silver prices are likely to remain volatile this week, analysts noted, saying the US Federal Reserve's interest rate decision, movements in crude prices, the US dollar, and new developments in the US-Iran conflict will be key drivers for the bullion market. 

Earlier, on Friday, the gold futures contract, due to expire on October 5, closed at a level of Rs 1,52,600 per 10 grams on Multi Commodity Exchange (MCX), while the silver contract–December 4 expiry– at 2,34,886 per kilogram. 

Trading on MCX is closed for the morning session on Monday due to Ganesh Chaturthi. Trading will resume in the evening session. 

Why Gold, Silver Prices To Remain Volatile This Week: 3 Factors 

1- The Federal Open Market Committee meeting on September 15-16 will be a major global event for the bullion market. Fed policy and Chairman Kevin Ward's comments are likely to set the direction for precious metals.

"Going ahead, gold will remain highly sensitive to Fed commentary, crude oil movements, the US dollar, inflation expectations and geopolitical developments," Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said.

2- Trivedi added that any decline in crude oil prices or a change in the US Federal Reserve's hawkish stance could support a gold recovery. In contrast, a rebound in crude oil prices or signs of tightening policy could trigger fresh selling.

3- Pranab Mair, senior vice president, EBG - Commodity and Currency Research, JM Financial Services Ltd, said investors would also watch monetary policy decisions by the Bank of England and the Bank of Japan after the Fed, with all three central banks expected to raise interest rates by 25 basis points.

He said the focus would also be on inflation data from India, Germany, the UK, the eurozone, the US and Japan, while investment and factory activity data from China would be important for industrial metals.

Crude Prices Remained Over $100

Meanwhile, crude oil ended the week above $100 a barrel, adding another key variable to the bullion market amid rising tensions in West Asia. "The outlook for gold and silver remains volatile and data-driven, with the Fed decision likely to provide the next big directional stimulus," Trivedi said.

Gold, Silver Rates Last Week 

Domestic markets showed mixed trends last week. Gold futures for October delivery on the Multi Commodity Exchange rose by Rs 17 to Rs 1,52,784 per 10 grams, while silver fell by Rs 2,684 (1.13 per cent) to Rs 2.34 lakh per kg.

However, global markets remained under pressure. Comex gold futures for December delivery fell 1.5 per cent to US$4,408.9 per ounce, while silver fell 2.34 per cent to US$65.19 per ounce.

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"Gold futures moved between gains and losses throughout last week, but overall remained under selling pressure and closed the week in negative territory by 1.5 per cent," Pranav Mer, Senior Vice President, EBG - Commodity & Currency Research, JM Financial Services Ltd, said.

The downside in the domestic market, however, was capped by a sharp fall in the rupee, he said.

(With Inputs From PTI)