Gold prices experienced a modest increase, whereas silver prices fell by over 3% on the Multi Commodity Exchange on Friday. This movement was influenced by rising oil prices, which heightened inflation concerns and bolstered expectations for prolonged elevated US interest rates. In the domestic market, silver futures for December 2026 delivery decreased by Rs 5,677, settling at Rs 1,78,848 per kg. Gold futures for December 2026 delivery increased by Rs 54, reaching Rs 1,36,279 per 10 grams. In the international market, gold prices experienced a modest uptick, rebounding from the prior session’s lowest point in over a year, yet the yellow metal is still poised to register a weekly decline. Spot gold increased by 0.2% to $3,883.05 per ounce following a decline of 3% on Thursday. Bullion has experienced a decline of 4.4% thus far this week. Spot silver experienced an increase of 0.1%, reaching a price of $50.07 per ounce.
In India, retail inflation saw an increase to 6.09% in October, up from 5.54% in September, as reported by the Ministry of Statistics and Program Implementation on Thursday. This signifies the twelfth consecutive month of acceleration in consumer prices within the nation. The October reading indicates that inflation has now exceeded the Reserve Bank of India’s target range of 2-6%. Nearly half of the economists surveyed anticipated that inflation would reach or surpass the 6% threshold. “We are seeing clear signs of broadening inflationary pressures, with higher energy and raw material costs passing through to core inflation. In addition, food price inflation is picking up, with further upside risks stemming from the impact of weak reservoir levels on the rabi crop. Headline inflation is likely to stay above the RBI’s 6% upper tolerance limit over the next few months. Against this backdrop, we expect another 25 bps rate hike, although the recent sharp correction in crude and INR appreciation provides some breathing room to the RBI,” said Vikram Chhabra.
Rising inflation figures coincide with a growing consensus among economists anticipating that the RBI will declare interest rate adjustments in its forthcoming December meeting. While a 25 basis points hike is expected by most, a few analysts also warn that a 50 basis point cut cannot be ruled out. This occurs in the context of a broader global cycle of interest rate increases. The Reserve Bank of India Governor Sanjay Malhotra last month announced the central bank’s first rate hike in nearly four years.
However, market analysts indicated that the transition to ‘calibrated tightening’ in the context of a challenging global geopolitical landscape was the more significant implication. The US Federal Reserve, along with various other central banks, has been increasing interest rates in response to the surge in oil prices triggered by the conflict in the Middle East, which has consequently led to inflationary pressures. Gold is often regarded as a safeguard against inflation; however, elevated interest rates increase the opportunity cost associated with holding non-yielding bullion, thereby diminishing its attractiveness to investors.
