Gold held in a tight range last week while silver slumped 6.3% to around $57, its lowest in ten weeks. Hot US inflation data, with CPI at 3.7% and PPI at 6.3%, kept December Fed hike odds near 90%, and 10-year yields above 5.1% capped gold’s upside. Hormuz attacks lifted Brent above $107 a barrel but fed inflation fears rather than safe-haven buying. A 1.9% rupee rally made MCX losses deeper. In India, around 17 fund houses paused fresh gold FoF inflows. Gold’s key support sits at $3,950–$4,200 (~₹1,45,500–₹1,51,000); festive and central-bank demand should keep dip-buying alive heading into Dhanteras.
PRICE PERFORMANCE
Gold spent the week boxed in, while silver got hit hard. Spot gold slipped 0.7% to $4,165, after briefly dropping to $4,073 on the US inflation numbers, and COMEX December futures settled at $4,181.10, down 0.83%. Silver had a rougher time. It fell 6.3% to around $57 and touched a ten-week low on the way. On MCX, the losses were bigger than the dollar moves alone would suggest, because the rupee had its best week in about seven months. MCX Gold fell 2.36% to ₹1,47,918 per 10 grams, and MCX Silver dropped 6.45% to ₹2,11,187 per kg.
MACRO BACKDROP & FED POLICY – HIKES STILL ON THE TABLE
The week revolved around US inflation, and the numbers came in hot. September CPI rose 3.7% year-on-year, above the 3.6% forecast and up from 3.4% in August. The next day, producer prices jumped 6.3% against an expected 5.3%, the biggest increase in four and a half years. Industrial production rose 0.7%, which showed the economy is still running warm.
Right after the CPI release, markets put the odds of a Fed hike at the October 27–28 meeting at close to 60%. That spike faded within a day, and by Friday the odds of an October move were back near 16%. The odds of a December hike, though, held at about 90% on CME FedWatch. Fed Chair Kevin Warsh praised the economy’s strength but said nothing about rates. Chicago Fed President Austan Goolsbee called the data “discouraging.” Cleveland’s Beth Hammack warned that the Fed might need to move more aggressively if inflation expectations slip. With the 10-year Treasury yield above 5.1%, holding a metal that pays no interest became more expensive, and that kept gold from rallying.
GEOPOLITICAL TENSIONS
Tensions in the Gulf flared again. Two Singapore-flagged ships were struck in the Straitof Hormuz, and one of them, the GFS Pride, caught fire and sank. Iran-aligned Houthi forces also hit a Saudi Aramco administrative building in Dhahran with a missile, and the
Saudi-led coalition struck back at Houthi energy sites in Yemen. Brent jumped above $107 a barrel. Usually that kind of news would send money into gold. This time the market read it as an inflation story: pricier oil means stickier inflation and a more hawkish Fed. Gold’s safe-haven appeal and rate fears pulled against each other, which explains the narrow range.
CURRENCY MOVEMENT
The Dollar Index climbed to 102.95 after the CPI release, then gave the gains back as yields eased, and ended the week 0.44% lower at 101.78. A softer dollar helped gold stay above $4,100 late in the week. The rupee was the bigger story for Indian investors. USDINR fell from 96.78 to 94.95, and the rupee gained about 1.9%, making it the best-performing Asian currency of the week. The RBI opened a special window from October 12 to meet the dollar needs of Indian Oil, HPCL and BPCL directly, which took a large chunk of demand out of the spot market. It also tightened the rules on speculative forex derivatives, and Governor Sanjay Malhotra signalled that more steps could follow. Forex reserves fell $8.58 billion to $726 billion, which shows how much the defence is costing.
INVESTMENT AND RETAIL DEMAND
Around 17 fund houses, have stopped taking fresh money into their gold ETF fund-of-funds from October 16. Some have done the same for silver FoFs. Lump-sum investments and new SIP, STP and switch registrations are paused, while existing SIPs and withdrawals continue. Industry officials say SEBI asked for the curb, passing it on through AMFI, but the regulator has not issued a circular. The aim is to slow gold imports ahead of Diwali. Markets read this as a soft nudge to slow dollar outflows. Investors can still buy gold ETFs directly on the exchanges.
TECHNICAL OUTLOOK
Gold is holding within a key support zone of $3,950–$4,200 (~ ₹1,45,500 – ₹1,51,000), an area where buyers have stepped in twice before. If prices sustain above $4,200, a rebound towards $4,400 (~ ₹1,51,000) looks likely in the near term. Silver, too, is sitting on support at $54–55.50 (~ ₹2,03,000 – ₹2,08,000) an area where buyers have stepped in twice before. A decisive move back above $59 (~ ₹2,16,000) could clear the way for a run towards $62 (~ ₹2,28,000).
WEEK AHEAD
This week, watch US housing data, jobless claims and flash PMIs, along with Fed commentary ahead of the October 28 decision, oil prices around Hormuz, and whether the RBI keeps defending the rupee. A stronger rupee could keep MCX prices below COMEX levels. Even so, festive buying and steady central-bank demand should attract buyers on dips. For long-term investors, a staggered buying approach around Dhanteras still makes sense.
