A stronger US dollar, declining physical demand in Asian hubs like China and India, and profit-booking at recent highs all contributed to gold prices closing lower for the first time in ten trading weeks. As investors booked gains after a protracted record-breaking rise, gold saw its biggest one-day dip in more than ten years this week, falling more than 6%. The dramatic reversal is the result of months of speculative positioning linked to worries about fiscal weakness and anticipation of further rate cuts by the Fed. In spite of the sharp fall, gold’s overall prognosis is still optimistic.

Although silver paralleled gold’s decline, it saw a more severe correction of about 9% as profit-taking increased following its big increase earlier this month. A brief relaxation of supply concerns and higher US bond yields contributed to the fall. A strong fundamental prognosis for silver is maintained by growing industrial demand from the electric car and solar photovoltaic industries. As the wedding season picks up speed, jewellers predict that any decrease could rekindle festival-buying interest, although retail demand weakened as consumers expected cheaper costs.

The US government shutdown is now in its 27th day, which makes it the second-longest closure in history. Despite the current federal government shutdown, the US Department of Agriculture said on Saturday that food subsidies under one of the nation’s largest social assistance programs would not be provided in November.

The two-day talks in Malaysia included export controls, fentanyl trafficking, agricultural commerce, and shipping levies, and the top negotiators from both sides had established a tentative understanding. This now prepares the way for President Xi Jinping and President Donald Trump to meet later this week in South Korea and clinch an agreement.

With the Federal Reserve, European Central Bank, and Bank of Japan all scheduled to make policy announcements this week, markets are turning their attention to central bank choices. Following last week’s weaker-than-expected CPI statistics, the Fed is largely anticipated to lower interest rates by 25 basis points, while the ECB and BOJ are anticipated to maintain their policy rates at their current levels.

Gold prices have been consolidating in the range of $4060 (~Rs 120,600) and $4170 (~Rs 124,600) after a sharp sell-off. Either side breakout will take prices 3-4% higher/lower.

As suggested last week, Silver has achieved the target of (~Rs 165,000), and then prices have corrected. Now $47(~Rs 144,000) is a very strong support, and $49 (~Rs 150,000) is the resistance. Prices are expected to consolidate in this range and then either side breakout will take prices 3-4% higher/lower.

Dr.Renisha Chainani, Head- Research, Augmont