Gold prices near Rs 1.47 lakh/10 grams, silver falls by Rs 1,144/kg as traders await Fed rate signals. What lies ahead?

Gold prices remained almost unchanged while silver prices dropped on Wednesday as investors awaited next week's Federal Reserve policy decision for fresh signals on the trajectory of US interest rates.

In the domestic market, MCX silver futures for December 2026 delivery fell Rs 1,144 to Rs 2,10,341 per kg. Gold futures for December 2026 delivery fell Rs 171 to Rs 1,48,858 per 10 grams. Spot gold fell 0.1% at $4,118.64 per ounce, while US gold futures for December delivery dropped 0.1% to $4,137.60.

Also read | Gold slips as investors await Fed rate signals

Will Fed hikes rates this month?

The US Federal Reserve will likely skip raising interest rates this month and announce a hike in its next meeting scheduled in December, according to nearly all economists polled by Reuters, as policymakers signal patience even as stubborn inflation argues for a tougher response.

According to CME's FedWatch Tool, traders are pricing in an 84% chance that the American central bank will leave rates unchanged during its upcoming meeting from October 27 to October 28, while expectations for a hike in December remain at 90%. This comes amid a global rate hike cycle.

Higher interest rates typically impact gold prices because they increase the opportunity cost of holding bullion, which does not pay interest. The US Federal Reserve raised its benchmark overnight interest rates by 25 basis points to the 3.75-4.00% range during its last meeting in September.

Key technical levels to watch out for gold

The $4,200 mark continues to act as a key resistance, while a stronger Dollar Index near 101.95 is limiting upside, said Jateen Trivedi, VP Research Analyst of Commodity and Currency, LKP Securities.

Going ahead, markets will focus on the Fed’s October-end rate decision and its policy guidance for further direction on bullion, with prices likely to remain volatile ahead of the announcement, the analyst said.

Gold prices could remain elevated at $4,200-5,000 per ounce over the next one-two years as central bank purchases and strong Asian investor demand increasingly drive the market, reducing the influence of US interest rate movements, according to a report by NDB Wealth Management. “Gold has stopped trading off the Fed,” the report said.

Also read | Gold may hit $5,000 an ounce as central banks, Asian buyers drive demand

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