Gold, silver prices edge higher: How festive demand could shape the outlook

Gold and silver prices rose in domestic futures trade on Thursday, October 1, with both precious metals gaining as markets assessed the outlook for US interest rates and investors looked ahead to the upcoming festive and wedding season in India.

On the Multi Commodity Exchange (MCX), December gold futures were trading at ₹1.49 lakh per 10 grams, up 0.51%, while December silver futures were at ₹2.24 lakh per kg, up 0.40%.

Gold has remained under pressure in recent session

s as higher US Treasury yields and a stronger dollar offset support from geopolitical uncertainty and inflation concerns.

NS Ramaswamy, Head of Commodity at Ventura, said gold is currently caught between these competing forces, with higher yields increasing the opportunity cost of holding the non-yielding asset.

He said the Federal Reserve's rate decision and upcoming US payroll data remain important for the near-term direction of gold. According to Ramaswamy, gold has lost some of its rate-cut premium but continues to have structural support from central-bank buying and investment flows into gold ETFs.

The recent correction in prices has also brought physical demand into focus as India enters the peak festive and wedding period.

Colin Shah, MD, Kama Jewelry, said festive demand around Dhanteras and Diwali has historically remained relatively resilient because of the cultural significance attached to gold purchases. However, elevated prices could lead consumers to adjust the quantity of gold they buy.

According to Shah, consumers are moving towards lightweight contemporary jewellery that fits within defined household budgets. He also highlighted the growing use of old-gold exchanges, which allows buyers to recycle existing jewellery while upgrading.

Wedding-related purchases are also expected to support demand, with Shah putting the average ticket size at around ₹1.5 lakh to ₹3 lakh and expecting occasional spikes of 15-20% during the peak festive period, similar to last year.

Meanwhile, silver has also recovered after its recent correction. Prithviraj Kothari, Managing Director, RiddiSiddhi Bullions Ltd and President of the India Bullion and Jewellers Association, said gold and silver had faced pressure from the stronger dollar and rising Treasury yields.

Silver remains particularly volatile, with its price influenced by both investment demand and industrial use.

For Indian buyers, the direction of the rupee will also remain relevant. Gaurav Garg, Head Research, Lemonn, said a weaker rupee continues to keep domestic commodity prices elevated even as global prices move.

Going ahead, precious metals are likely to remain sensitive to the US rate outlook, Treasury yields, the dollar and geopolitical developments, while in India, Dhanteras, Diwali and the wedding season could provide support to physical demand.