Introduction to Gold and Silver Market
The prices of gold and silver have experienced a decline in the futures trade due to investors booking profits and adopting a cautious stance ahead of the US Federal Reserve’s policy meeting outcome. On the Multi Commodity Exchange (MCX), gold futures for February delivery decreased by Rs 718, or 0.55 percent, to Rs 1,29,244 per 10 grams. This decline is a result of a business turnover of 13,208 lots.
Silver Prices Decline
Silver futures also extended its losses for the second straight session. The white metal for the March 2026 contract plunged by Rs 1,042, or 0.46 percent, to Rs 1,80,700 per kilogram in 13,823 lots. Notably, silver had reached its record high of Rs 1,85,234 per kg on Friday. According to Rahul Kalantri, VP Commodities at Mehta Equities Ltd, "Gold and silver witnessed mild profit-taking as traders awaited the FOMC meeting and a rebound in US Treasury bond yields."
US Federal Reserve’s Policy Meeting
The US Federal Reserve’s two-day policy meeting began later on Tuesday, with the rate decision and Chair Jerome Powell’s speech due on Wednesday. The outcome is expected to offer clues on the central bank’s stance heading into 2026. However, investor sentiment weakened after reports that the US Producer Price Index (PPI) data for October and November, earlier scheduled for release this week, will now be released in January, raising uncertainty over inflation and the Fed’s next steps.
International Market Trends
In the international market, Comex gold futures for February delivery slipped by USD 13.9, or 0.33 percent, to USD 4,203.8 per ounce from Monday’s closing of USD 4,217.7 per ounce. Manav Modi, Commodities Analyst – Precious Metal at Motilal Oswal Financial Services Ltd, stated, "Gold prices are trading slightly lower from the recent highs, amidst a rise in US bond yields, as traders look to 2026, beyond a near-certain rate cut at the Fed’s December meeting." Comex silver futures for March delivery were trading marginally higher at USD 58.43 per ounce in the overseas trade.
Supportive Factors for Gold and Silver
Despite the decline, continued gold buying by China for the 13th straight month and tightness in physical silver supply may offer downside support. The People’s Bank of China added to its gold reserves for the 13th consecutive month, taking its holdings to about 74.12 million ounces. Furthermore, silver ETF saw robust inflows, with iShares adding 324 tonnes of silver in the last week, its largest weekly inflow since July. This raise reportedly means iShares’ holdings now represent about 47.5 percent of all silver stored in London vaults.
Conclusion
In conclusion, the decline in gold and silver prices can be attributed to investors booking profits and adopting a cautious stance ahead of the US Federal Reserve’s policy meeting outcome. However, supportive factors such as central bank buying and exchange-traded funds (ETF) inflows remain positive for the bullion prices. As the market awaits the outcome of the policy meeting, it is essential to keep a close eye on the trends and developments in the gold and silver market.
