Central Banks in Focus
All eyes are on the U.S. Federal Reserve’s upcoming policy meeting and comments from Chair Jerome Powell, which are expected to guide the next phase of interest rate expectations. Additionally, meetings between U.S. President Donald Trump and China’s Xi Jinping in South Korea, as well as the European Central Bank’s policy review, could shape market sentiment across commodities, including gold.
Analysts believe that while gold has shown signs of short-term weakness, its long-term fundamentals remain intact, supported by persistent global fiscal imbalances and central bank diversification away from the dollar.
Sharpest One-Day Drop in a Decade
The yellow metal recorded its biggest one-day decline in over ten years, tumbling by more than 6 percent on Tuesday after reaching a record high of USD 4,398 per ounce. The correction was largely attributed to profit-taking and technical resistance near the USD 4,300 mark.
“Gold’s recent selloff reflects a natural phase of consolidation following a record-setting rally,” said Riya Singh, Research Analyst at Emkay Global Financial Services. “While short-term volatility is likely, the broader trend remains bullish due to ongoing geopolitical and fiscal risks.”
Domestic Market Trends
In India, the Multi Commodity Exchange (MCX) saw gold futures for December delivery decline by ₹3,557, or 2.8 percent, during the week. Physical demand weakened as buyers anticipated lower prices ahead of the festive and wedding season. However, jewellers expect any dip to revive consumer interest as the season progresses.
“Profit-taking at higher levels, combined with a firmer dollar, has kept pressure on domestic gold prices,” noted Pranav Mer, Vice President at JM Financial Services. “However, lower prices are likely to attract retail demand during Diwali and wedding purchases.”
Silver Mirrors Gold’s Correction
Silver, too, witnessed a steep fall of nearly 6 percent on MCX, dropping by over ₹9,000 per kilogram during the week. On the global front, silver futures fell more than 3 percent after recently touching an all-time high of USD 53.76 per ounce earlier this month. The metal’s price briefly dipped below USD 47, marking its steepest one-day fall since 2021.
“Silver’s correction was sharper than gold’s, primarily due to speculative profit-taking and stronger bond yields,” said Singh. Despite the correction, she noted that industrial demand from solar and electric vehicle manufacturing would continue to support silver’s medium-term prospects.
Outlook: Volatility Ahead, Long-Term Optimism Intact
Analysts expect bullion markets to remain range-bound in the near term, with a bias toward consolidation. However, factors such as persistent U.S. deficits, elevated geopolitical risks, and steady central bank gold buying are likely to underpin the metal’s long-term bullish trajectory.
Retail investors are advised to watch for cues from global central bank meetings before taking new positions. Experts suggest that a drop below USD 4,200 could attract renewed buying interest, particularly from Asian markets like India and China, where festive demand typically boosts physical offtake.
