Gold and Silver Prices Plummet Ahead of Diwali Celebrations

New Delhi, October 30 (Daily Kiran) : As the festive season approaches, gold and silver prices continue to decline. On the last trading day of the week, both domestic and international markets witnessed pressure on precious metals. Factors such as higher-than-expected inflation in the United States, the likelihood of an interest rate hike by the Federal Reserve in December, and elevated bond yields contributed to a drop of up to ₹3,000 in prices on the Multi Commodity Exchange (MCX).This decline may benefit consumers preparing for Dhanteras and Diwali shopping. In the international market, gold fell approximately 0.28%, trading around $4,020 per ounce, while silver dropped 1.20% to $51.750 per ounce. Experts noted that the U.S. core personal consumption expenditures (PCE) inflation rose by 0.3% in September, bringing the annual rate to 3.1%. Additionally, the U.S. economy grew by 3.4% in the third quarter, suggesting that the Federal Reserve may keep interest rates elevated for an extended period.Markets now estimate an over 80% chance of a rate hike in December, which places pressure on non-yielding assets like gold. The impact of global weakness was also evident in the Indian market. Gold prices fell to around ₹1.42 lakh per 10 grams, while silver traded near ₹1.86 lakh per kilogram. On the MCX, gold for December delivery dropped more than ₹800 or 0.59%, reaching a low of ₹1,41,753 per 10 grams. Silver experienced an even steeper decline, falling ₹3,730 or 1.96% from its previous closing price of ₹1,89,453 to ₹1,85,723 per kilogram.Technical analysts indicate that gold is currently near a crucial support zone of ₹1.40 lakh to ₹1.41 lakh. If this level breaks, prices could slide to ₹1.37 lakh to ₹1.38 lakh per 10 grams. For silver, the next significant support level is considered to be between ₹1.83 lakh and ₹1.85 lakh per kilogram. After a series of declines, silver is now priced at less than half of its lifetime high. In late January, silver prices surged past ₹4 lakh, reaching a record high of ₹4,20,048, but have since experienced a continuous drop.Market experts believe the current levels may be attractive for long-term investors and festive shoppers. However, in the short term, the Federal Reserve's policies, the dollar index, U.S. bond yields, and crude oil prices will dictate market direction. Meanwhile, crude oil prices are also a topic of discussion. Rising tensions in West Asia, developments related to Iran, and supply disruption fears are causing volatility in the oil market. High oil prices could further increase inflation, prompting central banks to delay interest rate cuts.This uncertainty keeps investors cautious regarding gold and silver. Experts are now focusing on the Federal Reserve's meeting on December 8-9 and upcoming data related to inflation and employment. If forthcoming data is weak and expectations for rate hikes diminish, gold and silver could see a recovery. Conversely, if the data is strong (inflationary), further losses may occur, with silver likely to decline faster than gold.