Introduction to Gold Price Prediction
Gold prices are likely to trade range-bound in the Diwali week, according to Manav Modi, Senior Analyst, Commodity Research at Motilal Oswal Financial Services Ltd. In the previous week, gold and silver marked new all-time highs due to safe-haven buying amid renewed US-China trade tensions and deepening geopolitical and economic uncertainties.
Factors Affecting Gold Prices
Gold inched towards the $4,400 level, gaining more than 60% year-to-date, driven by safe-haven demand, expectations of further US interest rate cuts, strong ETF inflows, and robust central bank buying. Silver also soared, crossing $52 on COMEX — an all-time high — as acute global supply shortages and backwardation signaled severe tightness in the market. Domestic premiums surged, reflecting heightened volatility.
US-China Trade Tensions
US President Donald Trump announced 100% tariffs on Chinese exports and fresh export controls on US software, while China expanded its rare earth export restrictions. Tensions escalated with reciprocal port fees and threats over Chinese oil imports from Russia. However, President Trump quickly took a softer side, keeping the market unsure regarding the 100% tariffs on China, over the weekend ceasefire was on the sidelines and attacks continued.
Impact on the Market
Amid a prolonged US government shutdown, key economic data releases may be delayed, amplifying market anxiety. Fed Chair Powell, at the NABE conference, indicated that future rate decisions would be data-dependent, acknowledging persistent labor market weakness and inflation risks. The IMF raised its global growth forecast but warned of headwinds from the trade war.
Gold and Silver Prices in India
In India, soaring bullion prices during Dhanteras led to a shift from jewelry to coins and bars, as gold reserves crossed $100 billion. MCX also revised margin requirements for Gold and Silver, effective October 14. Gold and Silver also, amidst the signs of extreme elevated prices, eased off from all-time levels, where silver fell by more than 5% in a single day.
Gold Price Outlook
Bias and Price Range
The bias for gold prices is range-bound, with a predicted price range of Rs 1,25,000 – 1,30,000. Supply tightness continues in the market; however, premiums in ETFs, physical continue to ease off, weighing on domestic exchange prices as well. Comments from Fed officials and inflation data are scheduled this week, but US shutdown effects could delay the same.
Conclusion
In conclusion, the gold price prediction for the Diwali week is range-bound, driven by various factors such as safe-haven demand, US-China trade tensions, and economic uncertainties. Investors should keep a close eye on the market and consider the predicted price range of Rs 1,25,000 – 1,30,000. It is essential to stay updated with the latest developments and comments from Fed officials to make informed investment decisions.
