Gold Market Correction Anticipated Ahead of Key US Economic Data and Fed Policy Signals

On MCX, gold futures for December delivery declined by Rs 165, indicating a corrective market phase.

New Delhi: Gold prices are anticipated to remain in a corrective phase in the upcoming week as markets await crucial US inflation data, amid ongoing uncertainties regarding trade tariffs and important economic indicators from China, according to analysts.

Market participants will be closely monitoring statements from US Federal Reserve officials for insights into monetary policy direction, which will likely influence the near-term trajectory for precious metals, experts added.

"We expect gold prices to experience consolidation or further correction as markets focus on inflation reports, the US Supreme Court's tariff hearings, Federal Reserve officials' speeches, and economic data from China," stated Pranav Mer, Vice President of EBG - Commodity & Currency Research at JM Financial Services Ltd.

Mer observed that despite gold prices ending slightly lower for the week, the metal remains range-bound, with upside limited by a strengthening dollar and lackluster physical demand, as retail investors remain cautious while anticipating further price adjustments.

However, he noted that downside risks are contained by uncertainties surrounding the US economic outlook, exacerbated by the ongoing federal government shutdown, which has delayed critical macroeconomic data releases that could complicate Federal Reserve decision-making at their upcoming meeting.

"Traders have adopted a wait-and-see approach as attention focuses on the US Supreme Court's ruling regarding the legality of Trump's trade tariffs—a decision expected to increase volatility across financial markets, particularly in gold," Mer elaborated.

On the Multi Commodity Exchange (MCX), gold futures for December delivery decreased by Rs 165 (0.14 percent) during the past week, closing at Rs 1,21,067 per 10 grams on Friday.

"MCX gold futures are trading within the Rs 1,17,000-1,22,000 per 10 grams range. Weak US employment reports, safe-haven demand, potential US interest rate cuts, and central bank purchasing are key factors driving gold prices in the immediate term," explained Prathamesh Mallya, DVP - Research, Non-Agri Commodities and Currencies at Angel One.

"Gold is on course for its largest annual gain since 1979, and if current market fundamentals persist, increased volatility could propel gold prices even higher," he added.

In international markets, Comex gold futures for December delivery gained USD 13.3 (0.33 percent) over the past week, settling at USD 4,009.8 per ounce on Friday.

"Gold traded near the USD 4,000 per ounce level this week, stabilizing after experiencing sharp fluctuations driven by evolving US monetary policy expectations and labor market statistics. The metal briefly gained following reports that US companies announced the highest October job cuts in over twenty years, strengthening arguments for a December interest rate reduction," said Riya Singh, Research Analyst for Commodities and Currency at Emkay Global Financial Services.

However, mixed messages from Federal Reserve officials and the absence of key inflation data due to the US government shutdown tempered market optimism, she added.

After retreating 10 percent from its record high above USD 4,390, gold is experiencing its third consecutive weekly decline but remains up more than 50 percent year-to-date—its strongest performance since 1979.

Singh attributed this remarkable surge to interest rate reductions, sustained central bank purchases exceeding 600 tonnes so far in 2025, and consistent inflows into gold-backed exchange-traded funds.

"However, bullion ETFs experienced two consecutive weeks of outflows by late October as investors secured profits," she noted.

Silver prices also remained range-bound during the week, reflecting trends in both gold and industrial metals.

On the MCX, silver futures for December delivery fell by Rs 559 (0.38 percent) to Rs 1,47,728 per kilogram on Friday. Comex silver futures edged lower last week, finishing at USD 48.14 per ounce.

"Silver maintained stability above the USD 48 per ounce level, supported by safe-haven demand amid US government shutdown concerns and changing expectations regarding the Federal Reserve's policy direction," Singh remarked.

Washington's decision to add silver, along with copper and uranium, to its official list of critical minerals represents a significant policy shift. This inclusion increases the total number of critical minerals to 60 and could potentially lead to new tariffs and trade restrictions under the administration's Section 232 investigation.

"The United States relies heavily on imported silver for industrial applications spanning electronics, solar panels, and medical devices. Any tariff actions could disrupt global supply chains and contribute to price volatility," Singh explained.

Mer added that silver's price momentum appears consolidative to corrective as long as it remains below Rs 1,50,000-1,51,000 per kilogram, with key support positioned at Rs 1,39,300-1,38,000 per kg.

"While policy uncertainty and profit-taking could limit sharp gains, resilient industrial demand, geopolitical risks, and a weakening US dollar are likely to keep silver prices well-supported above USD 47.55 per ounce in upcoming trading sessions," Singh concluded.