Bullion heading for another turbulent week

New Delhi: Gold and silver are heading for another turbulent week, with escalating tensions in West Asia, crude oil prices hovering near USD 110 per barrel and rupee movements set to shape bullion sentiment, analysts said. Investors will initially track Chinese economic data, crucial for industrial metals and silver, followed by US housing data, consumer sentiment, inflation expectations and PMI readings from major economies, including India, the UK and the US, they added. Commodity markets will remain closed during the morning session on Tuesday on account of Dussehra.

“We expect a capped, choppy week, as gold and silver will remain volatile as escalating tensions around the Strait of Hormuz and their implications for crude oil prices keep markets on edge,” said Gaurav Garg, Head of Research at brokerage platform Lemonn.

With Brent crude surging towards USD 110 per barrel in global markets, concerns over energy-driven inflation could limit bullion’s upside, while easing US Treasury yields may provide some support, he said. On the Multi Commodity Exchange (MCX), gold futures for December delivery declined Rs 3,581, or 2.4 per cent, over the past week to close at Rs 1.47 lakh per 10 grams. Silver tumbled Rs 14,568, or 6.4 per cent, to settle at Rs 2.11 lakh per kilogram. Gold prices slipped below Rs 1.5 lakh per 10 grams in the domestic market as the strengthening rupee weighed on prices, widening the divergence between domestic and international bullion rates, Garg said. “The hit came from the currency. The rupee gained to the 94.8 level from about 96.8, a gain of more than 180 paise in five sessions, helped by RBI intervention and traders unwinding dollar positions,” he added.

The rupee’s appreciation reduced the landed cost of imported gold, dragging domestic prices down by more than Rs 3,000 per 10 grams over four sessions, nearly five times the decline in international markets.