gold price expectations
Gold ended flat and Silver rose around 3.5% during the week as the delayed September PCE largely met expectations and the preliminary University of Michigan survey showed easing inflation expectations, a combination that reinforced market conviction in a near term Fed cut.
Headline PCE rose 0.3% month on month and 2.8% year on year while core PCE slowed to 2.8% from 2.9%, a profile that pairs sticky goods prices with moderating services inflation and points to cooling underlying pressure
The delayed September PCE and the University of Michigan survey together left the odds of a near term Fed cut intact and eased one year inflation expectations, which made non yielding metals more attractive.
Coupled with ADP’s surprise 32,000 decline in private payrolls and Challenger’s 71,321 announced layoffs, these data raised the odds of imminent easing, prompted position adjustments after earlier profit taking and helped lift bullion.
On November 1, Beijing cut a value-added tax exemption for certain gold purchased through the Shanghai Gold Exchange and the Shanghai Futures Exchange, a move expected to push up costs for jewellery and industrial gold
Silver continues its upturn touching $60, as structural factors underpinned the recovery, with low visible exchange inventories, renewed ETF accumulation and industry estimates of a 2025 supply deficit tightening the market and magnifying short covering, while durable industrial demand from solar and other green technologies sustains the medium term case for higher prices.
gold price forecast
USDINR crossed the 90 level last week on worries about dwindling dollar inflows into the economy.
Meanwhile, the RBI cut rates by 25 basis points on Friday and they also left room open for further easing. They paired the move with a $5 billion dollar/rupee swap aimed at boosting rupee liquidity.
The central bank had announced similar buy/sell swaps in February and March 2025, both $10 billion 8-Dec-2025 2 operations with three-year tenors. The rupee could fall to 92 per dollar if a trade deal isn't reached soon.
On Wednesday, the focus will also be on the dot plot and overall meeting rhetoric. In September, the dot plot projected three rate cuts by the end of 2026, one more cut than in June.
With the market currently pricing in 63bps of easing during 2026, there is a decent chance of the three rate cuts penciled in for next year, making it the baseline scenario for the Fed.
With the 87% likelihood of a rate cut already factored into prices, it is likely that gold prices will benefit due to declines in real bond yields, which will increase gold’s attractiveness vis-à-vis other investments.
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Past performance does not indicate future results. No guarantee is implied regarding future conditions. We do not offer portfolio advisory, management, or investment advisory services.
