Gold likely to consolidate next week as US data, Fed meeting loom: Analysts

New Delhi, Oct 19 (PTI) Gold prices are expected to witness some consolidation and mild correction next week as the recent record-breaking rally looks overstretched and physical demand eases after the festive rush, analysts said.

After hitting fresh highs in global and domestic markets, bullion may trade in a narrow range, with investors eyeing the US funding bill, key global data releases, and remarks from Federal Reserve officials ahead of the October 28-29 policy meeting, they added.

"Gold prices are likely to see some corrections/ consolidation as ongoing fundamentals are already priced in and physical demand wanes post mid-week," Pranav Mer, Vice President, EBG - Commodity & Currency Research, JM Financial Services Ltd, said.

He added that traders will monitor key global indicators, including Chinese data, UK inflation, provisional data on PMI from across regions, US consumer confidence and the Fed's commentary ahead of the October 28-29 meeting. Mer added that gold ended last week on a positive note, supported by festive demand in India and strong ETF buying.

"However, a sharp corrective move was seen on Friday, amid profit-booking as the rally looks overstretched now," he said.

Last week, gold futures rose by Rs 5,644, or 4.65 per cent on the Multi Commodity Exchange (MCX).

Prathamesh Mallya, DVP - Research, Non-Agri Commodities and Currencies, Angel One, said the shine in gold prices just does not stop as the momentum has been on the rising side throughout 2025, supported by policy uncertainty, US tariffs, and a slowdown in the American economy.

On the MCX, gold futures for December delivery hit a record of Rs 1,32,294 per 10 grams on Friday before closing at Rs 1,27,008, ending a five-day record streak.

Echoing similar views, Karthick Jongadla, investment manager on smallcase and Founder at Quantace Research, said, the rally was underpinned by a softer dollar, and easing bond yields, while lingering US-China trade noise and a US data/shutdown fog kept the safe-haven bid supported.

"Gold jumped to a new record this week. The MCX gold futures printed an intraday high of Rs 1,32,294 per 10 grams on October 17 and stayed firm into Dhanteras," he said.

Jongadla added that India's gold reserves with the Reserve Bank of India (RBI) have now crossed USD 100 billion, reflecting strong institutional interest.

On the global front, Comex gold futures for December delivery had risen to a new record of USD 4,392 per ounce on Friday before finishing at USD 4,213.30 per ounce, down by USD 91.30, or 2.12 per cent.

"Gold extended its meteoric rally to fresh record highs this week as investors rushed into safe haven assets amid renewed fears about cracks in the US financial system after two regional banks disclosed loan irregularities linked to potential fraud, reigniting worries over the health of borrowers," Riya Singh, Research Analyst, Commodities and Currency, Emkay Global Financial Services, said.

Meanwhile, silver futures for December delivery had bounced to hit a record of Rs 1,70,415 per kilogram. Later, the white metal prices remained elevated to close at Rs 1,56,604 per kg on the MCX.

Silver prices, in the past week, gained Rs 10,138, or 6.92 per cent, in the domestic futures market.

"Silver prices extended their bull-run along with gold and were up over 15 per cent in the week till Thursday, supported by reports of supply crunch in the physical market and sustained buying among ETF investors.

"However, prices pared more than half of the gains in a sharp sell-off on Friday which triggered profit-booking by investors. Also the rally in both bullions looks over-stretched and is likely to see some more correction ahead," Pranav Mer of JM Financial Services said.

Comex silver futures for December delivery hit a record of USD 53.76 per ounce before retreating to USD 50.10 per ounce, down by 6 per cent on Friday.

"Silver prices touched record highs on Friday before retracing slightly, marking a remarkable run of nearly 87 per cent for 2025," Riya Singh of Emkay Global Financial Services said.

She noted that exchange traded fund (ETF) holdings have expanded by 117 million ounces this year to 833 million ounces, though the recent accumulation wave appears to be plateauing.

She pointed out that the silver market has also been influenced by acute supply tightness in London.

"Over the past week, more than 15 million ounces were withdrawn from Comex warehouses in New York, largely moving to London to address local liquidity shortages. Yet strong ETF inflows of roughly 11 million ounces have further pressured London stocks, highlighting persistent global demand," Singh said.

Riya Singh further stated that the near-term focus for silver may shift from chasing new highs to maintaining current levels, with market dynamics increasingly shaped by liquidity and positioning rather than broad-based accumulation.

Analysts expect gold and silver to witness some volatility next week, with the broader trend still positive, supported by macroeconomic uncertainty, central bank buying, and sustained investor interest in precious metals as a hedge against volatility. PTI HG HVA