Precious metals experienced a modest rebound on November 2, with gold and silver futures showing signs of recovery after a challenging week marked by significant price drops. However, market analysts suggest that investors are not yet out of the woods, as crucial upcoming events are set to dictate the next moves for these commodities.
Modest Gains Follow Sharp Sell-Off
On November 2, MCX December gold futures edged up 0.15% to ₹1,38,691 per 10 grams, while silver futures gained 1.04% to ₹1,80,990 per kilogram. Internationally, gold futures climbed 0.30% to $3,910 per ounce, and silver advanced 1.61% to $50 per ounce. This uptick follows a sharp correction last week, where gold fell approximately 2.49% and silver plunged nearly 8.47%, with both metals breaching key international support levels, including gold slipping below the psychologically important $4,000 mark.
Key Influences on Precious Metals
According to Sugandha Sachdeva, Founder of SS WealthStreet, several factors have contributed to the recent volatility. Elevated crude oil prices, persistent inflationary pressures, and expectations of further monetary tightening by the US Federal Reserve have collectively weighed on precious metals. Broader selling across global financial markets, including cryptocurrencies and AI-related technology stocks, may have intensified the decline. Reports of a major cyberattack involving a prominent cryptocurrency exchange also added to market uncertainty, alongside leveraged position unwinding and margin-related liquidations.
US Elections and Fed Policy in Focus
Markets are now keenly awaiting the US midterm elections on November 3. A potential shift in congressional control could influence President Donald Trump's policy agenda, impacting US-Iran relations, crude oil prices, and overall global market sentiment. Signs of a diplomatic breakthrough with Iran, potentially easing geopolitical tensions and leading to a meaningful decline in crude prices, could spark a technical rebound in gold and silver by alleviating inflation concerns.
Furthermore, the upcoming US non-farm payrolls report will be closely scrutinized for clues regarding the Federal Reserve's December policy decision. Weaker employment growth could temper expectations for aggressive monetary tightening, while stronger data might reinforce the prospect of higher-for-longer interest rates, which typically weighs on non-yielding assets like gold.
Outlook and Key Levels to Watch
Sachdeva identifies crucial support levels for investors. For domestic gold, immediate support is at ₹1,37,000, with a more significant support zone near ₹1,27,000. Silver's immediate support lies in the ₹1,72,000–₹1,73,000 range, followed by ₹1,60,000. The near-term outlook for gold and silver remains cautious to bearish, with volatility expected to persist. While easing geopolitical tensions and lower crude prices could trigger a recovery, the broader technical structure appears weak. Investors will need to observe whether gold and silver can defend these key support levels before considering the recent gains a sustained trend reversal.