Gold Prices Likely To Stay Volatile As Investors Track US Economic Developments

New Delhi: Gold prices are likely to remain volatile in the coming week, as investors track developments around the US government funding bill, labour market data and Federal Reserve commentary, analysts said.

The release of the Federal Open Market Committee meeting minutes on Thursday is also likely to influence bullion market sentiment, they added.

"The week ahead is relatively light on data, but volatility is expected to remain high with frequency to profit-booking likely to increase, followed by renewed buying as well. In the week ahead the focus will remain on voting for the US government funding bill, while on the data front it will be the labour market data, if released.

"Federal Reserve official commentary will be closely watched with Fed Chair Jerome Powell's speech on Thursday," said Pranav Mer, Vice President, EBG - Commodity & Currency Research at JM Financial Services Ltd.

Mer said gold prices added another 3.5-4 per cent to its recent gains last week, buoyed by a weaker US dollar and rising concerns over the partial US government shutdown, which has delayed crucial macroeconomic data releases.

"Market participants are also pricing in the possibility of a potential Fed rate cut later in the month," he added.

On the Multi Commodity Exchange (MCX), gold futures for December delivery surged Rs 3,222, or 2.8 per cent, in the past week. On Friday, the yellow metal closed at Rs 1,18,113 per 10 grams, near its lifetime peak of Rs 1,18,444 per 10 grams recorded earlier in the week.

Jyoti Prakash, Managing Partner, Equity and PMS at AlphaaMoney, said gold prices rose 2.8 per cent last week, noting that its appeal lies less in big gains and more in achieving them with modest drawdowns.

"Rising exchange traded fund (ETF) holdings, likely renewed central bank demand, and stronger speculative positions are fuelling the breakout. Gold prices have disconnected from marginal production costs, with producer margins at the highest levels in 55 years," he noted.

Echoing similar sentiments, Prathamesh Mallya, DVP- Research, Non-Agri Commodities and Currencies, Angel One, said gold prices have touched lifetime highs in domestic markets. "Gold prices in India have climbed sharply in recent weeks, appearing unstoppable." Mallya attributed this to the US government shutdown, possible Fed rate cuts, and the impact of tariffs on various countries including India.

Reflecting robust domestic demand, India's gold and silver imports nearly doubled in September compared to August, ahead of the festive and wedding season, analysts said.

Globally, gold futures for December delivery rose 1.05 per cent to settle at USD 3,908.90 per ounce on Friday, touching a record of USD 3,923.30 per ounce on Thursday.

Riya Singh - Research Analyst, Commodities and Currency at Emkay Global Financial Services, said gold extended its rally to a fresh all-time high last week, marking its fifth consecutive session of gains, and reinforcing its status as the preeminent haven amid US political and monetary turbulence.

"The immediate catalyst was Washington's failure to pass a government funding package, forcing an 'orderly shutdown' of government operations for the first time in seven years. This threatens delays to crucial macroeconomic data releases such as Friday's non-farm payrolls report and has clouded visibility on the US outlook, while adding pressure on the dollar," Singh said.

Singh further stated that "Gold's year-to-date performance has been exceptional, with bullion prices rising more than 46 per cent, the largest annual gain since 1979".

"The surge has been driven by strong inflows into gold-backed ETFs, and heightened safe-haven demand amid concerns over Federal Reserve independence. The dollar's gains remain capped by expectations of two more Fed rate cuts, while geopolitical tensions in Europe keep bullion attractive," she added.

Silver futures also witnessed a strong rally last week. The white metal for December delivery bounced by Rs 3,855, or 2.72 per cent. It surged to end at Rs 1,45,744 per kilogram on Friday, after touching an all-time high of Rs 1,46,975 per kg.

"Silver continues to outperform gold, extending its multi-month rallies. In September, both MCX and Comex futures recorded consecutive gains. The white metal has surged 34 per cent, marking five straight months of positive performance," said Pankaj Singh, investment manager in Smallcase and Founder and Principal Researcher at SmartWealth.ai.

On the global front, Comex silver futures for December delivery rose 3.44 per cent to settle at USD 47.96 per ounce, reaching a lifetime high of USD 48.32 per ounce on Friday.

Singh noted that silver's superior momentum is supported by its dual role as a monetary and industrial metal. "Strong demand from solar panels, EVs, and electronics coupled with persistent supply deficits, is keeping the markets tight," he said.

Pranav Mer of JM Financial Services expects domestic silver prices to remain volatile but retain an upside bias. "Silver continues to outperform gold and momentum is expected to remain positive, with potential near-term levels in the range of Rs 1,50,000-1,70,000 per kg." Looking ahead, analysts said gold to remain supported by safe-haven demand, a weaker US dollar, and global geopolitical uncertainties, with intermittent profit-booking providing volatility but not derailing the ongoing uptrend.

(Except for the headline, this article has not been edited by FPJ's editorial team and is auto-generated from an agency feed.)

Published on: Sunday, October 05, 2025, 04:14 PM IST