Gold Price Prediction: Volatility Likely This Week As US Govt Funding Bill, Fed Signals Set Next Move

Gold Price Prediction: Gold prices are likely to witness heightened volatility in the coming week as investors track developments around the US government funding bill, labour market data, and commentary from Federal Reserve officials, analysts said. The release of the Federal Open Market Committee (FOMC) meeting minutes on Thursday will also play a key role in shaping bullion market sentiment.

“The week ahead is relatively light on data, but volatility is expected to remain high with frequency to profit-booking likely to increase, followed by renewed buying as well. In the week ahead the focus will remain on voting for the US government funding bill, while on the data front it will be the labour market data, if released. Federal Reserve official

commentary will be closely watched with Fed Chair Jerome Powell’s speech on Thursday,” said Pranav Mer, Vice President, EBG – Commodity & Currency Research at JM Financial Services Ltd.

Mer noted that gold prices added another 3.5-4 per cent to recent gains last week, supported by a weaker US dollar and growing concerns over a partial US government shutdown that has delayed key macroeconomic data releases. “Market participants are also pricing in the possibility of a potential Fed rate cut later in the month,” he added.

On the Multi Commodity Exchange (MCX), gold futures for December delivery surged Rs 3,222, or 2.8 per cent, during the past week. On Friday, the yellow metal settled at Rs 1,18,113 per 10 grams, just shy of its lifetime high of Rs 1,18,444 per 10 grams recorded earlier in the week.

Gold’s Rally Driven by Safe-Haven Appeal, ETF Flows

Jyoti Prakash, Managing Partner, Equity and PMS at AlphaaMoney, said gold prices rose 2.8 per cent last week, noting that the metal’s attraction lies “less in big gains and more in achieving them with modest drawdowns”.

“Rising exchange-traded fund (ETF) holdings, likely renewed central bank demand, and stronger speculative positions are fuelling the breakout. Gold prices have disconnected from marginal production costs, with producer margins at the highest levels in 55 years,” he said.

Echoing similar views, Prathamesh Mallya, DVP–Research, Non-Agri Commodities and Currencies, Angel One, said, “Gold prices in India have climbed sharply in recent weeks, appearing unstoppable.”

Mallya attributed this rally to the US government shutdown, potential Fed rate cuts, and the impact of tariffs on various countries, including India.

Reflecting strong domestic demand, analysts noted that India’s gold and silver imports nearly doubled in September compared to August, ahead of the festive and wedding season.

Globally, gold futures for December delivery rose 1.05 per cent to settle at $3,908.90 per ounce on Friday, after hitting a record high of $3,923.30 per ounce on Thursday.

Gold’s Year-to-Date Gains Hit 46%

Riya Singh, Research Analyst – Commodities and Currency at Emkay Global Financial Services, said gold extended its rally to a fresh all-time high last week, marking its fifth consecutive week of gains.

“The immediate catalyst was Washington’s failure to pass a government funding package, forcing an ‘orderly shutdown’ of government operations for the first time in seven years. This threatens delays to crucial macroeconomic data releases such as Friday’s non-farm payrolls report and has clouded visibility on the US outlook, while adding pressure on the dollar,” she said.

Singh added that “Gold’s year-to-date performance has been exceptional, with bullion prices rising more than 46 per cent, the largest annual gain since 1979”.

She attributed the surge to strong inflows into gold-backed ETFs and heightened safe-haven demand amid concerns over Federal Reserve independence. “The dollar’s gains remain capped by expectations of two more Fed rate cuts, while geopolitical tensions in Europe keep bullion attractive,” she added.

Silver Extends Outperformance, May Touch Rs 1.7 Lakh/kg

Silver mirrored gold’s strength, extending its multi-month rally. On the MCX, silver futures for December delivery jumped Rs 3,855, or 2.72 per cent, to close at Rs 1,45,744 per kilogram on Friday, after touching an all-time high of ₹1,46,975 per kg during the week.

“Silver continues to outperform gold, extending its multi-month rallies. In September, both MCX and Comex futures recorded consecutive gains. The white metal has surged 34 per cent, marking five straight months of positive performance,” said Pankaj Singh, Investment Manager at Smallcase and Founder & Principal Researcher at SmartWealth.ai.

On the global front, Comex silver futures for December delivery rose 3.44 per cent to settle at $47.96 per ounce, touching a lifetime high of $48.32 per ounce on Friday.

Singh said silver’s strong momentum stems from its “dual role as a monetary and industrial metal”, citing demand from solar panels, EVs, and electronics coupled with persistent supply deficits.

Pranav Mer of JM Financial Services said domestic silver prices are likely to stay volatile but with an upside bias. “Silver continues to outperform gold and momentum is expected to remain positive, with potential near-term levels in the range of Rs 1,50,000-Rs 1,70,000 per kg,” he said.

Looking ahead, analysts expect gold to stay supported by safe-haven demand, a weaker dollar, and global geopolitical uncertainties, with intermittent profit-booking adding volatility but unlikely to derail the ongoing uptrend.

(With Inputs from PTI)