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What is the story about?
Gold and silver prices traded lower in global markets on Tuesday, November 3, as expectations of higher US interest rates for longer and renewed concerns over the US-Iran conflict kept investors cautious.
On COMEX, gold futures were trading at $3,956.60 per ounce, down $13, or 0.33%. Silver futures declined 0.578, or 1.14%, to $50.310 per ounce.
The decline came even as crude oil prices rebounded in early Asian trade. Brent crude futures rose 0.5% to $105.25 per barrel, while US West Texas Intermediate (WTI) crude gained 0.5% to $96.93.
Oil prices moved higher following reports that the United States had struck Iran's Qeshm Island, reviving concerns over an escalation in the conflict and prolonged disruptions to energy supplies through the Strait of Hormuz, a route that previously carried around one-fifth of global crude oil and natural gas supplies.
The developments have added to uncertainty in commodity markets, with investors assessing the implications of higher energy prices for inflation and the outlook for interest rates.
Why are gold and silver prices under pressure?
Despite geopolitical uncertainty, gold has struggled to attract sustained safe-haven buying. A key reason is the outlook for US monetary policy.
Expectations that interest rates could remain elevated for longer have weighed on gold, which does not offer interest income. Higher crude oil prices are also adding to inflation concerns, potentially limiting the scope for central banks to cut rates.
Satish Dondapati, Fund Manager at Kotak Mahindra AMC, said gold had corrected nearly 3% in US dollar terms over the past week, touching its lowest level in almost a year.
He noted that softer US bond yields and a weaker dollar should ordinarily support gold, but the Federal Reserve's hawkish stance and expectations of higher interest rates for longer have kept prices under pressure.
How did gold and silver perform in the previous session?
Gold and silver had recovered some ground on Monday, November 2, following the sharp correction towards the end of October.
In New Delhi, gold prices rose ₹500 to ₹1.42 lakh per 10 grams, supported by festive purchases from jewellers and retailers ahead of Diwali. Silver remained steady at ₹1.86 lakh per kg, inclusive of taxes, according to local traders.
In international markets, spot gold gained nearly 1% to $3,899.73 per ounce, while silver advanced more than 2% to $50.25 per ounce.
However, the recovery came after a significant correction in October. Domestic gold prices had declined ₹7,300 from ₹1.49 lakh per 10 grams on September 30, while silver had fallen around ₹46,000 from ₹2.32 lakh per kg.
What is the outlook for gold prices?
Dondapati said the recent correction does not change the long-term investment case for gold, particularly as the current interest-rate environment may not be sustainable over an extended period.
However, he expects near-term pressure and further volatility. He advised investors against deploying their entire investment amount at current levels, suggesting staggered purchases during price declines instead.
Gold, he said, can continue to play a role in long-term portfolios as a hedge against uncertainty and a diversification tool.
For now, crude oil movements, developments in West Asia and signals on US interest rates remain key factors to watch. A further rise in energy prices could intensify inflation concerns, while a prolonged period of high interest rates could continue to limit the recovery in precious metals.
-With agencies inputs
On COMEX, gold futures were trading at $3,956.60 per ounce, down $13, or 0.33%. Silver futures declined 0.578, or 1.14%, to $50.310 per ounce.
The decline came even as crude oil prices rebounded in early Asian trade. Brent crude futures rose 0.5% to $105.25 per barrel, while US West Texas Intermediate (WTI) crude gained 0.5% to $96.93.
Oil prices moved higher following reports that the United States had struck Iran's Qeshm Island, reviving concerns over an escalation in the conflict and prolonged disruptions to energy supplies through the Strait of Hormuz, a route that previously carried around one-fifth of global crude oil and natural gas supplies.
The developments have added to uncertainty in commodity markets, with investors assessing the implications of higher energy prices for inflation and the outlook for interest rates.
Why are gold and silver prices under pressure?
Despite geopolitical uncertainty, gold has struggled to attract sustained safe-haven buying. A key reason is the outlook for US monetary policy.
Expectations that interest rates could remain elevated for longer have weighed on gold, which does not offer interest income. Higher crude oil prices are also adding to inflation concerns, potentially limiting the scope for central banks to cut rates.
Satish Dondapati, Fund Manager at Kotak Mahindra AMC, said gold had corrected nearly 3% in US dollar terms over the past week, touching its lowest level in almost a year.
He noted that softer US bond yields and a weaker dollar should ordinarily support gold, but the Federal Reserve's hawkish stance and expectations of higher interest rates for longer have kept prices under pressure.
How did gold and silver perform in the previous session?
Gold and silver had recovered some ground on Monday, November 2, following the sharp correction towards the end of October.
In New Delhi, gold prices rose ₹500 to ₹1.42 lakh per 10 grams, supported by festive purchases from jewellers and retailers ahead of Diwali. Silver remained steady at ₹1.86 lakh per kg, inclusive of taxes, according to local traders.
In international markets, spot gold gained nearly 1% to $3,899.73 per ounce, while silver advanced more than 2% to $50.25 per ounce.
However, the recovery came after a significant correction in October. Domestic gold prices had declined ₹7,300 from ₹1.49 lakh per 10 grams on September 30, while silver had fallen around ₹46,000 from ₹2.32 lakh per kg.
What is the outlook for gold prices?
Dondapati said the recent correction does not change the long-term investment case for gold, particularly as the current interest-rate environment may not be sustainable over an extended period.
However, he expects near-term pressure and further volatility. He advised investors against deploying their entire investment amount at current levels, suggesting staggered purchases during price declines instead.
Gold, he said, can continue to play a role in long-term portfolios as a hedge against uncertainty and a diversification tool.
For now, crude oil movements, developments in West Asia and signals on US interest rates remain key factors to watch. A further rise in energy prices could intensify inflation concerns, while a prolonged period of high interest rates could continue to limit the recovery in precious metals.
-With agencies inputs
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