Gold Faces Consolidation Amid Central Bank Meetings and Geopolitical Events
Gold prices are poised for consolidation in domestic markets as investors prepare for key central bank decisions and global trade developments. The precious metal recorded its first weekly decline in ten weeks, with analysts pointing to profit-booking and shifting demand patterns.
Key Takeaways
- Gold fell 2.8% on MCX, marking first weekly loss in ten weeks
- Global gold prices dropped 1.8%, with sharpest single-day fall in over a decade
- Silver suffered steeper correction of nearly 9% after record rally
- All eyes on Fed policy, ECB review, and US-China trade talks
Market Performance and Analysis
On the Multi Commodity Exchange (MCX), gold futures for December delivery fell by Rs 3,557 during a holiday-shortened week. Globally, Comex gold futures dropped USD 75.5, with prices tumbling 6.11% on Tuesday – the biggest one-day decline in over a decade.
“Gold prices closed in negative for the first time in ten trading weeks on profit-booking at recent tops, weakening physical demand in Asian centres like India & China, and further weighed by a stronger US dollar,” said Pranav Mer, Vice President, EBG—Commodity & Currency Research, JM Financial Services Ltd.
Physical demand in India weakened as buyers anticipated deeper corrections, while lower prices sparked buying interest in China and Singapore.
Factors Driving the Correction
Analysts attribute the selloff to multiple factors including profit-taking after a record bullion run, improved risk sentiment from potential US-China trade progress, and a stronger US dollar.
“The sharp reversal is due to months of speculative positioning tied to expectations of deeper rate cuts by the Fed and concerns about fiscal weakness. Despite the steep correction, the broader outlook for gold remains bullish,” said Riya Singh, Research Analyst at Emkay Global Financial Services.
She noted that macro drivers like persistent US deficits, central bank diversification from the dollar, and elevated geopolitical risks continue supporting gold’s long-term case.
Silver’s Sharp Correction
Silver mirrored gold’s weakness but experienced a more severe correction. MCX silver futures crashed by Rs 9,134, while international prices fell over 8% in their steepest one-day decline since 2021.
“Silver mirrored gold’s weakness but suffered sharper correction of nearly 9% as profit-taking intensified after its meteoric rise earlier this month,” Singh noted.
Despite the pullback, silver’s fundamental outlook remains strong due to rising industrial demand from solar photovoltaic and electric vehicle sectors.
Outlook and Price Projections
Pranav Mer expects silver prices may see further domestic correction but could rebound toward Rs 1,51,000-1,59,900 per kg once stabilization occurs. Riya Singh projects silver advancing toward USD 60 per ounce in the next 8-12 months if investment flows and industrial demand remain resilient.
Traders report subdued physical demand currently, though jewellers anticipate festival and wedding season buying could revive if prices dip further.
Bullion markets are expected to remain volatile but range-bound with consolidation bias ahead of key policy decisions from the Federal Reserve, European Central Bank, and developments in US-China trade discussions.
