Gold, silver prices: What is weighing on precious metals and what investors should watch

Gold and silver prices declined in international markets on Wednesday due to a stronger US dollar and higher Treasury yields, though softer US jobs data provided some support.

Gold and silver prices were trading lower in international markets on Wednesday, October 7, with COMEX gold down 0.31% at $4,174.30 an ounce and COMEX silver declining 0.47% to $61.30 an ounce in the latest trade.

The decline comes after gold prices in the domestic market fell by ₹200 to ₹1.49 lakh per 10 grams on Tuesday (October6), while silver remained steady at around ₹2.27 lakh per kg, according to local traders.

Why are gold and silver prices under pressure?

A stronger US dollar and elevated US Treasury yields have been weighing on precious metals, according to Prithviraj Kothari, Managing Director at RiddiSiddhi Bullions Ltd., President of India Bullion and Jewellers Association Ltd. and Chairman at Jain International Trade Organisation.

Gold does not generate interest income, making it relatively less attractive when bond yields rise. A stronger dollar can also put pressure on dollar-denominated commodities such as gold and silver by making them more expensive for buyers holding other currencies.

However, softer-than-expected US September jobs data has provided some support to gold by cooling expectations of an October Federal Reserve rate hike, Kothari said.

What is happening in silver?

Silver has also come under pressure in the latest session.

Kothari said silver has broken below its head-and-shoulders neckline and has already reached the $60 an ounce target. He sees $57 an ounce as the next level to watch.

What levels should gold investors watch?

For gold, Kothari said the metal needs to hold the $4,100-per-ounce level, which he equates to roughly ₹1.48 lakh per 10 grams. A sustained break below this level could bring $4,000 an ounce, or around ₹1.44 lakh per 10 grams, into focus.

These are technical levels and should not be interpreted as a forecast of domestic retail prices, which can also be affected by the rupee-dollar exchange rate, import-related costs, taxes and local demand.

What could move gold and silver next?

Investors will continue to track the US dollar, Treasury yields and expectations around the Fed's interest-rate path. Developments in the West Asia could also influence precious metals through their impact on oil prices, inflation expectations and broader risk sentiment.

In the domestic market, gold was already facing subdued retail demand on Tuesday (October 6).

Saumil Gandhi, Senior Analyst - Commodities at HDFC Securities, attributed the weakness partly to subdued demand during Pitru Paksha.

For investors, therefore, the immediate focus remains on US interest-rate expectations, the dollar, bond yields and geopolitical developments, while technical levels could provide additional cues for near-term price direction.