Gold, Silver rebound on softer Dollar and falling yields; domestic gains capped by Rupee strength

Gold and silver prices rebounded on Friday, buoyed by a weaker dollar and falling US Treasury yields, despite persistent inflation concerns. COMEX Gold futures were trading just below $4,200, up 0.57% for the day, while COMEX Silver outperformed, rising 1.23% to around $57.85. The gold-silver ratio eased to 73, reflecting silver's relative strength.

The recovery came after a rebound on Thursday, driven by a drop in 10-year US Treasury yields to a three-week low. Risk aversion and concerns over inflation and equity valuations led investors into government bonds, easing pressure on non-yielding assets. The dollar retreated from recent highs. However, September CPI came in at 3.7%, above expectations, keeping the possibility of another Federal Reserve rate hike this year in view.

Fed officials' remarks tempered hopes for an October move. Markets now await Fed Chair Jerome Powell's appearance at the IMF meetings and the October 27-28 FOMC meeting. Analysts noted that Middle East uncertainty and investment demand continue to provide structural support. Domestic bourses saw muted gains for MCX Gold near ₹147,700 and MCX Silver at ₹211,600, with both weighed down by a stronger rupee.

The rupee is expected to strengthen further, potentially limiting gains in rupee-denominated gold. SEBI has also halted new subscriptions in Fund of Funds schemes tracking gold and silver ahead of the festive season, which may impact retail inflows into the asset class. WTI crude fell 1.69% to around $95.90, pressured by diplomatic signals and supply concerns.