Precious metals have entered a phase of price correction, marked by significant changes in gold and silver prices following the Diwali festive season. The recent price volatility, initially fueled by geopolitical tensions, the US government shutdown, and other global crises, is now shifting in response to improving international trade sentiment and imminent US economic data.
Gold prices experienced a notable decline, dropping by 1.08% to ₹1,19,646. According to Kedia Advisory, this decrease is largely due to intensified profit-taking after a sharp rally. The metal’s safe-haven appeal has diminished amid growing optimism over progress in U.S.–China trade negotiations. Investor focus has now shifted to the upcoming Federal Reserve interest rate decision. The anticipated review of a potential trade deal framework by Presidents Trump and Xi later this week is expected to further influence bullion sentiment.
Economic signals from the U.S. present a mixed picture: the Dallas Fed business activity index slipped to -9.4, its weakest level since May, with the revenue index falling to -6.4, suggesting softening economic momentum. On the physical demand side, Indian gold demand remained subdued as buyers held out for further corrections despite the festive buying during Dhanteras and Diwali, with dealers quoting premiums of up to $25 per ounce. Conversely, demand improved modestly in China and Singapore amid lower rates. Despite the near-term correction, participants at the LBMA annual gathering forecasted gold prices to average around $4,980 per ounce over the next 12 months, though some institutions like Citi and Capital Economics have trimmed their outlooks.
Silver, on the other hand, saw a slight gain, rising 0.68% to ₹1,44,342, mainly driven by short covering following its recent steep declines. This movement occurred even as optimism over U.S.–China trade progress initially weighed on its safe-haven demand. The market is now keenly focused on the Federal Reserve’s policy decision, with expectations pointing toward a 25-basis-point rate cut following weak US inflation data. Supporting the case for a rate cut, the ADP National Employment Report showed private businesses created an average of only 14,250 jobs per week in the past month, signaling weakening business activity.
The oil market also reacted to global supply concerns, with crude oil prices falling 1.99% to ₹5,330. This was driven by reports that OPEC+ may raise output again in December, which overshadowed the optimism generated by the progress in U.S.–China trade talks. The producer alliance, led by Saudi Arabia, is reportedly considering a modest production hike to regain market share.
