Domestic gold prices fell sharply today, tracking a sharp decline in global rates as the US dollar rose. Bullion futures fell 0.5% to ₹50,494 per 10 gram after remaining rangebound in past couple of sessions. Silver dropped 0.75% to ₹57,848 per kg. In international markets, gold fell 1% to $1,648.46 per ounce as the dollar index rose 0.3%, eroding the appeal of rival safe-haven bullion. Spot silver fell 1.9% to $19.20 per ounce, while palladium shed 0.9% to $1,924.66.
“Gold prices stayed volatile between 50300-50850 as prices saw range sessions in Comex Gold between $1635-1675 keeping buyers and sellers neutral with edge for sellers as prices saw dip of $10 in Comex and ₹200-odd points fall in MCX. Gold prices shall await further cues from Fed's view point on inflation and stance on interest rates, as highly volatile dollar prices have played an effect strongly on gold price in the recent past," said Jateen Trivedi, VP Research Analyst at LKP Securities.
“Gold can be seen in the range of 50250-50850. Either side break can take prices further towards 49500 to 51500," he added.
Investor attention will be focused on the Federal Reserve meeting next week. The US central bank is expected to raise rates by 75-basis-point at the conclusion of its November 1-2 policy meeting but some analysts are hoping for a smaller hike in December.
Bets for rising rates overall have put gold on course for a seventh straight monthly fall. Gold prices in India had jumped above ₹55,000 in March but since then have struggled to regain shine.
The Indian rupee posted a weekly rise on bets that the U.S. Federal Reserve will pivot to smaller-sized rate hikes from December.
In a note, Kotak Securities said: "Last week, comment by Federal Reserve Bank of San Francisco President Mary Daly signalled towards possibility of some debate among Fed officials over whether to slow down aggressive rate hikes after the November meeting. She said Fed should avoid putting the economy into an "unforced downturn" by raising interest rates too sharply, and its time to start talking about slowing the pace of the hikes in borrowing costs. This added to bets that future interest rate increases could come in smaller increments to achieve the Fed’s target neutral rate though the Fed seems set to again lift its benchmark rate by 75 basis points at the November policy meeting. Still, both investment and speculative demand have been declining as latest CFTC report showed speculators switched to net short positions of 20,633 contracts in COMEX gold in the week ending October 18 while SPDR Gold holdings stand at 31-month low of 928.39 tonnes."
Silver has support at $19.34-19.15, while resistance is at $19.82-19.95, according to Rahul Kalantri, VP Commodities, Mehta Equities Ltd. On MCX, silver has support at Rs57,570-56,980, while resistance is at Rs58,680–58,980, he added.