The precious metals complex took a hit on the Multi Commodity Exchange on October 7. MCX December gold contracts slid 0.52% to settle near ₹1.49 lakh per 10 grams. Silver fared worse, shedding 1.12% to ₹2.24 lakh per kg. The entire session was defined by a flight to safety in the US dollar and a sharp uptick in crude oil prices, both of which historically correlate inversely with bullion demand.
Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions Ltd., pointed to the macroeconomic squeeze. "Gold and silver have remained under pressure as higher crude prices revive inflation and interest-rate concerns," Kothari said. He noted that geopolitical friction in West Asia is keeping the dollar firm, while market participants are currently frozen, waiting for the latest US Federal Reserve minutes to gauge the trajectory of monetary policy.
Technical charts are flashing warning signals for silver specifically. Kothari identified $4,100 an ounce as the critical support zone for gold. For silver, the metal has already breached a key technical floor, with the next major support level sitting around $57 per ounce. This break below key levels suggests short-term momentum is firmly bearish, forcing traders to reassess their short positions.
Nirpendra Yadav, Senior Research Analyst at Bonanza, highlighted a shift in relative valuation. The gold-silver ratio has climbed to roughly 68:1, well above the long-term average of 60:1. This indicates gold has outperformed silver recently, largely driven by its status as a central bank reserve asset and safe haven. "A higher ratio indicates that gold has outperformed silver, giving silver a relative valuation advantage," Yadav said, though he cautioned that this does not guarantee an immediate price reversal for silver.
Domestically, the RBI’s recent 25-basis-point hike to 5.50% adds another layer of friction. Yadav warned that this calibrated tightening acts as a near-term headwind for Indian bullion prices. However, the impact remains muted because domestic rates are heavily anchored to global dollar strength and US Treasury yields rather than local repo rates alone. Darshan Desai, CEO of Aspect Bullion & Refinery, added that physical demand in India remains price-sensitive, with jewellers and consumers adopting a wait-and-watch stance despite the ongoing wedding season.
Investors now look to the Fed’s policy outlook as the primary driver. Gaurav Garg, Head of Research at Lemonn, emphasized that until the dollar stabilizes and crude oil prices cool, precious metals will struggle to find a sustainable floor. The market is essentially holding its breath for clarity on the US rate path, with any hawkish surprises likely to push gold below the $4,100 support level.