Gold falls below $4,000, silver slips too: What's weighing on precious metal prices?

Gold and silver prices remained under pressure on November 12, as stronger-than-expected US inflation data, a firm dollar and hawkish signals from the Federal Reserve weighed on investor sentiment. Both precious metals extended their weakness, with traders assessing the possibility of higher interest rates and their impact on bullion demand.

Gold and Silver Prices

On the Multi Commodity Exchange (MCX), December gold futures declined 0.41% to ₹1,39,140 per 10 grams. December silver futures fell 0.83% to ₹1,83,001 per kg.

In international markets, December gold futures slipped 0.35% to $3,986.42 per ounce, moving below the crucial $4,000 mark. December silver futures traded at $51.495 per ounce, down nearly 1%.

Hotter US Inflation Adds Pressure

The latest US inflation figures added to concerns about the Federal Reserve's monetary policy. Consumer prices rose 0.4% month-on-month in October, compared with market expectations of 0.3%. Core CPI, which excludes food and energy, also increased 0.3%, above the expected 0.2%. The September headline CPI reading had risen 0.6%.

Higher-than-expected inflation could make it difficult for the US Federal Reserve to consider easing monetary policy. Expectations of higher interest rates tend to weigh on gold and silver because these metals do not offer interest or yield. A stronger US dollar adds further pressure by making dollar-denominated bullion more expensive for buyers using other currencies.

How the Rupee Impacts Domestic Bullion Prices

The dollar's strength has also become an important factor for Indian investors. Since India relies heavily on imports to meet its gold and silver demand, movements in the rupee against the dollar influence domestic bullion prices. Rupee depreciation can make imported precious metals costlier, while rupee appreciation can cushion the impact of a fall in international prices.

Crude Oil's Decline Fails to Support Gold

Interestingly, the sharp correction in crude oil prices has not provided meaningful support to gold and silver so far. Crude has fallen nearly 18% in November, but investors remain focused on inflation concerns, dollar strength and the outlook for US interest rates.

Gold and Silver: Key Levels to Watch

According to Sugandha Sachdeva, Founder of SS WealthStreet, the near-term outlook for gold and silver remains cautious to negative. She sees gold finding immediate support at ₹1,37,000, with the next important support at ₹1,35,000. On the upside, resistance is placed at ₹1,44,500, followed by ₹1,46,200. For silver, the immediate support is at ₹1,79,000, followed by ₹1,73,000, while resistance is seen at ₹1,92,000 and ₹1,97,000.

US PPI Data: The Next Trigger

Markets will now track US Producer Price Index (PPI) data due on November 13, along with weekly jobless claims, for further clues on inflation and the Federal Reserve's policy path. A stronger-than-expected reading could renew selling pressure, while softer data may offer room for a technical rebound in precious metals.