Gold, Silver Extend Rout as Crude Surge Revives Rate-Hike Bets; Silver at 11-Month Low

Silver prices in India hit an 11-month low, falling below ₹2 lakh per kg on the Multi Commodity Exchange (MCX) for the first time since late 2025, according to multiple sources. MCX silver futures for December delivery plunged to as low as ₹1,92,800 per kg on Friday, a decline of 3.4% on the day and more than 14% over the past 10 sessions, as reported by one source.

Gold followed, with MCX gold futures slipping below ₹1.42 lakh per 10 grams on Friday, down more than 20% from this year’s peak of ₹1.81 lakh in January, according to the same source. Another report noted that gold prices have fallen over 26% from January’s record highs. Internationally, spot gold fell to around $4,015 an ounce, its lowest since July, while Comex gold traded at $4,037.6 per ounce, down 0.6% in Friday’s session.

**Crude Oil Sparks Renewed Inflation Fears**

The selloff was driven by a sharp rise in crude oil prices, which topped $113 a barrel amid fresh Houthi attacks in Saudi Arabia, stoking supply concerns. "Oil is driving this selloff more than fear is," said Aditya Agarwala, chief investment officer at InvestValue, in a report. Brent crude above $110 a barrel has revived inflation worries and prompted markets to price in another US Federal Reserve rate increase before year-end.

Higher interest rates reduce the relative appeal of non-yielding assets like gold and silver, as yield-bearing instruments become more attractive. The US Federal Reserve’s October 27-28 policy meeting is now in focus. According to a report citing CME’s FedWatch Tool, traders saw a 16% probability of a rate hike at that meeting and a 90% probability of an increase in December. Those probabilities are market-implied and subject to change.

**Silver Hit Harder on Industrial Demand Worries**

Silver’s decline was steeper than gold’s, with prices falling 53% from their record high of ₹4,20,048 per kg on January 29, according to one source. "Silver has hit an 11-month low, breaking below crucial support levels. Prices have now fallen to pre-US-Iran war levels and are declining further," commodities expert Anuj Gupta told CNBC Awaaz, as reported by a separate source.

Beyond the macro pressures, silver is facing headwinds from industrial demand. Weakness in solar-panel manufacturing in China and reduced demand from the chip-making industry amid the technology-sector selloff have added to the metal’s woes, one report noted.

**Gold Also Under Pressure Despite Geopolitical Risks**

Gold, traditionally a safe-haven asset during geopolitical turmoil, has failed to rally on West Asia tensions. "Sentiment remains under pressure amid concerns over the West Asia conflict and expectations of higher US interest rates, which are reducing the appeal of non-yielding assets," said Jateen Trivedi, vice-president and research analyst at LKP Securities, as quoted in a report. He added that attention was shifting to the Fed’s policy decision next week.

Renisha Chainani, chief research officer at Augmont, attributed the decline to rising oil prices reviving inflation concerns and strengthening expectations that interest rates may remain elevated for longer, according to a report.

**Consumer Behaviour Shifts as Diwali Approaches**

With Diwali – a peak gold-buying season in India – approaching, the sharp price drop is altering purchasing patterns. Many households are opting for lightweight jewellery, coins and gold bars instead of heavy ornaments, while younger buyers are exploring gold exchange-traded funds (ETFs) and digital gold as more affordable alternatives, one report noted.

**Outlook: Further Downside Expected**

Commodities expert Anuj Gupta, cited in a report, recommended a bearish trading strategy for silver in the near term. He advised selling silver on a rebound towards ₹2,01,000 per kg, with a stop-loss at ₹2,03,500 and a target of ₹1,97,000 per kg. The commentary underscores expectations that the precious metals rout may have further to run.

City-wise spot prices reflected the slide. In Mumbai, 24K gold was quoted at ₹1,43,370 per 10 grams and silver at ₹2,00,010 per kg, according to one source. Delhi saw gold at ₹1,43,130 and silver at ₹1,99,670 per kg. Kolkata reported gold at ₹1,43,180 and silver at ₹1,99,750 per kg.