Bullion's October correction deepens amid elevated crude prices Fed rate jitters

     New Delhi, Oct 31 (PTI) Bullion prices extended their decline in the national capital on Saturday, with gold and silver approaching levels last seen in December 2025, as rising energy rates, inflation concerns and expectations of tight US monetary policy weighed on investor sentiment.

     Gold of 99.9 per cent purity fell Rs 3,200 to Rs 1,42,000 per 10 grams, inclusive of all taxes, from Friday's close of Rs 1,45,200 per 10 grams, according to the All India Sarafa Association.

     It was last quoted at Rs 1,42,300 per 10 grams on December 26, 2025.

     Silver prices also continued their downward trajectory, declining Rs 4,200 to Rs 1,86,000 per kilogram, inclusive of all taxes, from the previous close of Rs 1,90,200 per kg.

     The white metal was last trading around these levels on December 8, 2025, when it was quoted at Rs 1,85,000 per kg.

     The correction has gathered pace through October. Gold has declined Rs 7,300 from Rs 1,49,300 per 10 grams recorded on September 30, while silver has shed Rs 46,000 from Rs 2.32 lakh per kg during the same period in domestic markets.

     In September alone, the yellow metal dropped Rs 11,600 from Rs 1,60,900 per 10 grams recorded on August 31, while the white metal lost Rs 13,500 from Rs 2,45,500 per kg recorded during the same period.

     "Gold and silver prices were weighed down by rising energy prices, which fuelled inflation concerns, and hawkish commentary from the US Federal Reserve," said Rahul Khetawat, Senior Vice President and Fund Manager at 360 ONE Asset.

     These developments tempered expectations of monetary easing and put pressure on precious metals, leading to a correction in prices, he said.

     In overseas markets, spot gold plunged by USD 145.84, or nearly 4 per cent, to close at USD 3,875.55 per ounce on Friday, hitting its lowest level in over a year. It was last quoted around this level at USD 3,887.09 per ounce on October 3, 2025.

     Spot silver also tumbled USD 3.04, or 6 per cent, to settle at USD 49.12 per ounce. The metal was last quoted at USD 48.02 per ounce, recorded on November 6, 2025.

     "Gold fell towards USD 3,800 and silver slipped below USD 50 per ounce, while Shanghai contracts also dropped sharply while still in premium to global markets, especially for white metal," said Manav Modi, Commodities Analyst at Motilal Oswal Financial Services Ltd.

     He added that higher oil prices and firm inflation have revived expectations of a December Fed hike, strengthening the case for higher-for-longer interest rates by the US Federal Reserve.

     Modi also pointed out that an AI-led equity rout added forced liquidation and cash-raising pressure, while silver's industrial exposure amplified its fall. In China, reports of investors selling gold to raise cash are a possible additional factor, though not confirmed.

     He noted that speculative short positions had also built up ahead of the US mid-term elections, with President Donald Trump's majority likely to be an important factor in determining the further trajectory of bullion prices.

     According to Rajeev Sharan, Head of Research, Brickwork Ratings, October was volatile for both metals, with gold falling about 6 per cent from its high during the month, while silver dropped more sharply by about 17 per cent.

     Profit booking by investors, a stronger US dollar, elevated bond yields, and fading hopes of early interest rate cuts contributed to the correction in precious metals, he said.

     For the domestic markets, Sharan said the decline appeared to be a healthy correction rather than a change in the underlying trend, with festive and wedding-related purchases in India expected to support demand in November.

     However, steady gold purchases by central banks globally will continue to provide a cushion to prices, he said.

     Silver, meanwhile, has an additional demand driver in its industrial applications, particularly in solar panels and electronics, although this exposure also makes the metal more volatile.

     With investment inflows into gold and silver funds remaining firm, both metals are likely to witness choppy trading alongside a gradual recovery rather than another sharp decline, Sharan said.

(This story has not been edited by THE WEEK and is auto-generated from PTI)