Gold, silver prices ahead of wedding season: Down over 4% this week - Investors guide before US Fed Dec meeting

Gold and silver prices have taken a sharp knock, offering some relief to buyers ahead of India's wedding season. However, the recent correction in precious metals has also raised concerns about whether the sell-off has further room to run, particularly as hotter-than-expected US inflation strengthens expectations of another Federal Reserve rate hike.

On the Multi Commodity Exchange (MCX), gold futures for December delivery ended Friday higher by ₹525, or 0.39%, at ₹1,36,750 per 10 grams. Silver contracts also recovered, gaining ₹234, or 0.13%, to ₹1,76,543 per kg.

Despite Friday's recovery, both metals remained sharply lower for the week. MCX gold declined around 4.6%, while silver fell nearly 5%, reflecting pressure from a stronger US dollar, rising bond yields and concerns over the US interest-rate outlook.

Gold witnessed its steepest fall on Thursday, when prices dropped nearly 3% to a year-to-date low and their weakest level in more than a year. Bargain buying helped the yellow metal recover some losses in the following session. Silver tracked gold's decline but experienced sharper price swings, reflecting its higher volatility.

The sell-off followed the hotter-than-expected US inflation reading for October. The producer price index (PPI) rose 6.5% year-on-year, while the latest inflation data strengthened expectations of a December rate hike. Higher interest rates tend to weigh on non-yielding assets such as gold and silver by making interest-bearing investments more attractive.

Gold price outlook: Can MCX gold recover above ₹1.38 lakh?

Ponmudi R, CEO of Enrich Money, said MCX gold ended the week with a negative bias, closing near ₹1,36,705 after breaking below the ₹1,37,500– ₹1,38,300 support zone. This range has now turned into a resistance area.

According to Ponmudi, immediate resistance is placed at ₹1,37,500– ₹1,38,300, followed by ₹1,40,000– ₹1,41,000. A sustained move above these levels would be necessary to signal a recovery.

On the downside, ₹1,35,066– ₹1,34,000 is the immediate support zone. A break below this range could drag prices towards ₹1,32,000– ₹1,31,000. The weekly chart has also formed a bearish engulfing candle, indicating continued pressure on the metal.

Ponmudi added that the rupee's weakness, with USD/INR rising around 0.4% during the week, cushioned domestic gold prices against the sharper decline in international markets.

Rajeev Sharan, Head of Research at Brickwork Ratings, said global spot gold slipped from above $4,100 to around $3,880 an ounce during the week, falling well below the third-quarter average of $4,262 an ounce.

The correction was also reflected in domestic prices, with 24-carat gold easing from ₹1,42,420 to ₹1,35,809 per 10 grams, while December futures settled near ₹1,36,750 per 10 grams.

Sharan attributed the pullback to a stronger US dollar and rising bond yields after US consumer prices increased 0.4% in October. This pushed market expectations of a December Federal Reserve rate hike to nearly 90%.

He expects gold to trade in the $3,850–$4,000 an ounce range in the near term. However, wedding demand in India and steady central bank purchases could help limit the downside. While interest-rate concerns may weigh on prices in the short term, he said sustained demand continues to support gold's longer-term appeal.

Silver price outlook: Will MCX silver hold ₹1.70 lakh?

Silver has also remained under pressure, with prices trading below the key ₹1,80,000 mark on MCX and $50 an ounce internationally.

Ponmudi said MCX silver ended the week with a negative bias, closing near ₹1,76,309 and remaining below key resistance levels. Immediate resistance is placed at ₹1,78,000– ₹1,80,000, followed by ₹1,88,000– ₹1,90,000. A sustained move above these zones could improve the recovery outlook.

On the downside, ₹1,72,000– ₹1,70,000 is the immediate support range. A decisive break below it could expose silver to further weakness towards ₹1,68,000.

Daily momentum remains weak, with the relative strength index (RSI) approaching the oversold boundary. Ponmudi said the hotter US inflation reading and a firmer dollar weighed on silver, although the weaker rupee limited the decline in domestic prices.

The broader silver outlook also remains cautious. A weekly close below ₹1,80,000 could extend the decline towards ₹1,74,600 and ₹1,72,500. Traders have been advised to remain cautious with long positions, maintain a bearish bias below ₹1,80,000 and consider options hedging to manage risk.

What should investors watch next week?

The coming week could prove important for precious metals, with the release of the Federal Reserve meeting minutes and Nvidia's earnings among the key events on investors' radar.

The Fed minutes could offer further clues about policymakers' thinking on inflation and the future interest-rate trajectory. Any indication of a more hawkish stance could strengthen the dollar and put additional pressure on gold and silver.

For gold, a sustained recovery above $4,000 an ounce, followed by a decisive move beyond $4,150, would be needed to signal a meaningful improvement in the technical outlook and challenge the prevailing bearish trend.

For now, the sharp weekly correction has made precious metals cheaper for buyers ahead of the wedding season. However, whether this offers an attractive buying opportunity or marks the beginning of a deeper correction will depend largely on the Fed's policy signals, the dollar's movement and how prices respond to crucial technical support levels.