Gold is on course for its steepest weekly drop in more than four months, trading near $4,016 an ounce on Friday after touching its lowest level since July 20. In India, silver futures on MCX slipped below ₹2 lakh a kilo.
At a glance
- Spot gold has lost 3.5% this week, which would be its worst week since June.
- MCX December silver traded at ₹1,96,031 a kg on Friday morning, down ₹3,568.
- Traders see an 80% chance of a US rate hike in December, though almost none expect one next week.
Background
Gold pays no interest, so it tends to fall when investors expect higher interest rates, because cash and bonds then earn more. Higher oil prices push up inflation, which makes the US Federal Reserve more likely to raise rates. Indian gold and silver prices on the Multi Commodity Exchange (MCX) follow global prices in dollars, adjusted for the rupee and import duty.
What happened
Spot gold eased 0.2% to $4,016.27 an ounce by 0351 GMT on Friday, Reuters reported, after touching its lowest level since July 20 earlier in the session. It has fallen 3.5% this week, putting it on track for its worst week since June.
Silver fell further. Spot silver slid 1% to $53.98 an ounce, and in India the December silver contract on MCX dropped ₹3,568 to ₹1,96,031 a kilo, below ₹2 lakh, Business Standard reported. MCX December gold was down ₹1,002 at ₹1,42,307 per 10 grams.
Why prices are falling
Oil rose about 4% to a five-month high on Thursday after Houthi attacks on Saudi Arabia raised fears of supply disruption. Higher oil lifts inflation expectations, which supports the case for keeping US interest rates high, and that makes non-yielding gold less attractive. "Higher oil is reviving inflation fears, lifting yields, and delaying Fed easing. That is a difficult cocktail for bullion," said Monte Safieddine of Capital.com.
A sharp sell-off in stocks added to the pressure. Gold fell almost 3% on Thursday as investors sold it to raise cash, Bloomberg reported. Justin Lin of Global X ETFs called it a "liquidity-driven selloff", the kind that happens when investors need money to meet margin calls.
What it means for India
Lower prices come just before Diwali, when Indian demand for gold and silver jewellery and coins usually rises. MCX gold is now well below this year's high of ₹1,80,779 per 10 grams, and silver is less than half its peak of ₹4,20,048 a kilo.
The next big test is the Fed's meeting on October 27-28 and US inflation data due next week. Traders see little chance of a rate rise next week, but still put the odds of a December hike at 80%, according to Reuters.
Our read
Outlook: bearish. High oil prices are keeping US rate-hike bets alive, and investors are selling gold to raise cash during the stock market slide.
What to watch
- Whether spot gold holds the $4,000 level that traders are trying to defend.
- The Fed's policy decision on October 28 and next week's PCE inflation data.
- Oil prices, after attacks on Saudi Arabia pushed them to a five-month high.
For information only, not investment advice.
Gold price in India
metalscost.com India reference price as of 2026-11-01.
Detailed analysis
Timeline
- 2026-10-22: Gold falls almost 3% to its lowest close in more than three months; oil jumps about 4%.
- 2026-10-23: MCX silver falls below ₹2 lakh a kilo; spot gold trades near $4,016.
- 2026-10-28: The US Federal Reserve ends its two-day policy meeting.
Inflation
Oil's jump to a five-month high is reviving inflation fears that keep rates higher for longer.
Interest Rates
Traders put the odds of a December Fed hike at 80%, raising the cost of holding gold.
Geopolitical Risks
Houthi attacks on Saudi Arabia lifted oil, which has hurt gold more than its safe-haven appeal has helped.
What could lift prices
- Worries about AI spending have cut bets on a rate hike next week to below 10%.
- Global X's Justin Lin expects a V-shaped recovery once forced selling ends.
What could weigh on prices
- A clean break below $4,000 would signal the market expects rates to stay high, says Capital.com's Monte Safieddine.
- Further attacks on oil supplies could push oil, and rate-hike bets, higher still.
Country impact
| Country | Impact | Reason |
|---|---|---|
| India | High | MCX silver fell below ₹2 lakh a kilo and gold eased just before Diwali buying. |
| United States | High | Expectations for the Fed's December decision are driving gold prices. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Jewellery | Positive | Lower gold and silver prices before Diwali can encourage festive buying. |
| Gold Mining | Negative | A weekly drop of 3.5% trims the margins miners earn on each ounce. |
Who gains, who loses
- Festive buyers in India: Gold and silver are cheaper than earlier this month as Diwali approaches.
- Recent gold and silver investors: Silver has fallen below ₹2 lakh a kilo and gold is down 3.5% this week.
Other ways this could play out
- If the Fed signals no December hike, gold could recover quickly from near $4,000.
- If gold breaks below $4,000, Global X's Lin sees a possible test of $3,900.
Price risks
- A sudden drop in oil prices would weaken the case for higher rates and lift gold.
- If the stock sell-off ends, forced selling of gold could stop.
Technical view
Price is trading below both its 20-period and 50-period moving averages, a bearish alignment.
Computed from metalscost.com's own stored price history.
India
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