For Indian families planning their Diwali gold purchase, the past week was a mixed signal. Gold recorded its strongest weekly gain since August, rising nearly 4.5 per cent. Then on Friday the rally lost steam, and the reason came from Washington, not Mumbai or Zaveri Bazaar.

At the same time, crude oil had its worst week in more than six years. Hopes of policy shifts after the US midterm elections pulled WTI crude down from above $104–$105 a barrel to around $90. Brent eased to the $97–$98 range. Both benchmarks fell over 12 per cent for the week, their steepest weekly decline since April 2020.

Why money moved from shares to metals

The rally was not only about safe-haven buying. Worries about the global artificial intelligence sector caused sharp outflows from equity markets into commodities, and a changing Federal Reserve outlook also lifted sentiment for precious metals.

That support did not last into Friday. The October US employment report showed nonfarm payrolls rising by 165,000, against market expectations of 65,000. The unemployment rate edged down to 4.1 per cent from 4.2 per cent. Strong hiring makes it easier for the Fed to keep tightening, and markets reacted quickly.

The Fed left interest rates unchanged at its October meeting. Since then, two officials have spoken in favour of further gradual rate increases to contain persistent inflation. After the jobs data, the implied probability of a December rate hike rose to around 81 per cent. The 10-year US Treasury yield approached 4.88 per cent and the dollar strengthened. Gold pays no interest, so rising yields and a stronger dollar tend to push its price down. Prices pulled back from their intraday highs as a result.

On Friday, MCX gold futures for December declined 1.20 per cent to Rs 1,42,364. MCX silver futures for December held up better, advancing 0.10 per cent to Rs 1,84,977 per kg.

What it means at the jeweller's counter

For retail buyers, the weekly numbers matter more. According to the India Bullion and Jewellers Association (IBJA), 10 grams of 24-carat gold cost Rs 1,41,452 on Friday, up from Rs 1,40,054 at last week's close. That is an increase of about Rs 1,400 in a week.

Analysts said lower international gold prices attracted physical buying in India ahead of Diwali. Festive demand usually picks up when prices dip, and this week's Friday fall gave buyers that chance. Analysts also warned that expectations of further Fed tightening and higher borrowing costs continue to limit how long bullion's recovery can last.

The fall in crude is a separate positive for India, which imports most of its oil. If prices stay lower, the pressure on fuel-linked inflation and the import bill could ease.

Levels to watch

Analysts place immediate resistance for MCX Gold at Rs 1,43,000–Rs 1,43,700, with immediate support at Rs 1,41,000–Rs 1,40,000. For MCX Silver, immediate resistance stands at Rs 1,86,000–Rs 1,88,000, with support at Rs 1,78,000–Rs 1,80,000.

Heading into the festive peak, gold has strong local demand behind it but a hawkish Fed against it. For buyers waiting for a better price, the support zone near Rs 1,40,000 is the level to watch. Any further shift in US rate expectations could move prices quickly in either direction.

With inputs from IANS