Gold price outlook: Gold prices witnessed a sharp sell-off this week as rising crude oil prices, a stronger US dollar and elevated US Treasury yields weighed on bullion. Renewed inflation concerns and expectations of tighter US monetary policy further pressured precious metals, leading to declines in both MCX futures and retail gold prices in Chennai.
Over the week, MCX gold futures fell around 3.50%, with heavy selling pulling prices down from their previous highs. In Chennai, retail gold prices dropped 3.85%. The price of 24K gold fell by ₹5,560 per 10 grams, from ₹1,48,190 to ₹1,42,480.
On Friday alone, MCX gold futures declined 0.92%, falling ₹1,315 to settle at around ₹1,41,994 per 10 grams.
In Chennai, retail gold prices dropped 1.32% on Friday. The price of 24K gold fell by ₹190 per gram to ₹14,248, while 22K jewellery gold declined by ₹175 per gram to ₹13,060.
Globally as well, gold prices have come under intense pressure as surging crude oil prices, Bullion fell to a three-month low on Friday and was heading for its steepest weekly decline in more than four months, putting the psychologically important $4,000-an-ounce mark in focus ahead of the US Federal Reserve’s October 27-28 policy meeting.
Gold has declined around 4% this week, marking its weakest weekly performance since June.
Why are gold prices falling?
Rising energy prices have emerged as a major headwind for bullion. Brent crude touched a more than five-month high after Houthi attacks in Saudi Arabia heightened concerns over disruptions to global energy supplies. Higher oil prices can fuel inflation, potentially forcing central banks to maintain restrictive monetary policies for longer.
Although traders largely expect the Federal Reserve to leave interest rates unchanged at its October 27-28 meeting, stronger-than-expected US consumer and producer inflation data have strengthened expectations of possible monetary tightening later this year. Markets are also watching next week’s personal consumption expenditures (PCE) inflation data, the Fed’s preferred measure of inflation.
Saish Sawant, Research Analyst-Commodities at Emkay Global Financial Services, said gold’s decline had been amplified by investors selling liquid assets to meet margin calls following a sharp correction in US equities.
“Gold is heading for its steepest weekly decline in four months, down over 3.5% and holding above $4,000/oz after briefly slipping below that level for the first time since 29 July. Cross-asset deleveraging has driven the move, as a sharp correction in US equities pushed investors to sell liquid holdings such as gold to meet margin calls,” Sawant said.
The US dollar and Treasury yields have also influenced bullion prices. While both have eased this week, the dollar index remained near 101.5, close to a three-week low, and the 10-year US Treasury yield fell to a one-month low amid safe-haven demand for government bonds. Sawant noted that gold had fallen approximately 20% from its level at the onset of the US-Iran conflict in late February.
Gold and silver outlook: Key support levels to watch
The near-term technical outlook remains weak, with gold struggling around the $4,000-an-ounce threshold. Renisha Chainani, Chief Research Officer at Augmont, said a sustained move below this level could open the door to further declines towards $3,950, equivalent to approximately ₹1,40,000, from around ₹1,42,000 at the $4,000 level.
Over the medium term, however, Chainani expects gold and silver to attempt to establish a base. She identified $3,950-$4,000 as a potential support and accumulation zone for gold, while silver could find support around $50-$55.
Chainani expects the precious metal to hold these levels and potentially rebound 10-15% over the coming weeks. For gold’s broader uptrend to resume, she said prices would need to sustain above $4,200 an ounce.
Meanwhile, Sawant maintained a bearish near-term view, warning that continued selling could push gold towards the previous swing low of $3,940. He added that changing expectations around artificial intelligence-led growth could eventually provide some support by influencing interest-rate expectations, once the current wave of liquidation subsides.
“The near-term trend remains bearish, and persistent selling risks a retest of the $3,940 swing low. Doubts over AI-led growth are already trimming rate expectations, which should provide support over time once the liquidation fades,” Sawant said.
Gold price outlook: What experts expect ahead of Diwali?
Despite the correction in prices, jewellery demand could remain resilient during the festive season. Kaushlendra Sinha, CEO of IAGES, said consumers continued to regard gold as a store of value and could view softer prices as an opportunity to buy.
“This festive season, gold demand is expected to remain strong as consumers continue to view gold as a trusted store of value. While Gold prices which seems to have softened up from the highs, we see this as an opportunity and confidence in gold continues to hold firm,” Sinha said.
Sinha added that buyers were increasingly prioritising purity, ethical sourcing and transparency alongside design and value. Lightweight jewellery and old-gold exchange programmes were also gaining traction as consumer preferences evolved.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
