Gold prices declined 1.36% during the week as a stable dollar and stronger-than-expected US inflation data reinforced expectations that the US Federal Reserve may raise interest rates later this year. On Friday, MCX gold June futures dipped 0.59% while MCX silver May futures lost 0.94%. Currently, gold futures stand at ₹1,56,000 per kg while silver futures at ₹2,67,000 per kg. The price of 10 grams of 24-carat gold was at ₹1,56,463 on Friday, down from ₹1,58,622 seen on Monday market opening, according to data published by the India Bullion and Jewellers Association (IBJA).
US inflation accelerated to 3.8% in April, marking the highest level in three years according to the Commerce Department's report released Thursday. This represents an increase from 3.5% in March and the highest reading since May 2023. On a monthly basis, prices rose 0.4% in April, down from the 0.7% jump recorded in March. The inflation surge is primarily driven by spiking gasoline prices and higher food costs that are squeezing American consumers' finances. Core inflation rose to 3.3% in April from 3.2% the previous month, reaching the highest core figure since November 2023. However, one positive sign emerged as core prices rose just 0.2% in April from March, indicating some moderation in underlying price pressures. The report showed that prices have risen for many items in addition to gas, indicating that inflation could persist and pose problems for congressional Republicans in this year's midterm elections.
Markets are now assigning a meaningful probability to a rate hike before year-end, representing a dramatic reversal from earlier expectations of cuts in 2026. The inflation reading is notably above the Federal Reserve's target of 2%, which means Fed policymakers may decide to forego any cuts to their key short-term interest rate this year. The recent US Fed's meeting minutes showed that more officials are now open to the possibility that they may need to hike rates. Some officials have signalled that their next move could be a hike rather than a cut, as higher prices are cutting into consumers' incomes. According to reports from CNBC TV18, higher prices are also reducing real incomes, with incomes unchanged in April from March and adjusted for inflation, incomes actually slipped 0.1% last month. A higher-than-expected PCE Index reading will send bond yields even higher, with concerns about inflation having driven bond yields significantly higher in recent weeks.
COMEX Gold is currently trading in the USD 4,570–USD 4,600 range, with weekly price action continuing to reflect a consolidation phase and a cautious undertone. Technically, immediate resistance is placed in the USD 4,600–USD 4,650 region and the USD 4,400–USD 4,350 range continues to serve as a critical support area. For MCX Gold, immediate resistance is placed in the ₹1,60,000 to ₹1,62,000 range and the ₹1,54,000–₹1,52,000 region continues to act as a critical support base. As per an analyst, gold and silver continue to attract selective safe-haven and value-oriented buying near key technical levels, although upside momentum remains closely linked to expectations surrounding US monetary policy, bond yields and the trajectory of the US dollar. Higher energy prices fuel inflationary pressure increasing the likelihood of Fed tightening, denting gold's appeal as investors gravitate toward yield-bearing assets.
Despite the weakness in futures, physical gold demand remains robust with the World Gold Council reporting that global bar and coin demand hit 474 tonnes in the first quarter of 2026, the second highest on record, driven largely by Asian buyers. Total quarterly demand reached 1,231 tonnes with a record $193 billion in value. This divergence suggests that while Western ETF investors have pulled back, structural appetite for gold remains intact. Central bank demand also provides support, with China extending its buying streak in April and Poland adding 31 tonnes in the first quarter. However, analysts note that Turkey sold heavily to support FX liquidity, though overall official sector demand remains positive. ING argues that reserve diversification continues to underpin gold's long-term outlook, even if short-term price action is dominated by yields and the dollar.
