Gold steadies near $4,000 as Fed policy meet begins; silver near 11-month low

COMEX gold futures settled near $4,030, a slight decrease of 0.20 percent, as the Federal Reserve commenced its two-day policy meeting. Investors were eagerly anticipating insights into the future rate trajectory. Silver exhibited a more pronounced decline, falling 1 percent to approximately $53.80, marking its weakest level in 11 months.

Gold experienced a broader loss of over 4 percent last week, as the 10-year US Treasury yield neared the 5 percent mark, heightening the potential downside of owning the non-yielding asset. The Federal Reserve is widely anticipated to maintain interest rates within the range of 3.75 percent to 4 percent during Wednesday's meeting.

"Markets continue to assign over 80 percent odds to a December Fed rate hike, which is restraining gold's recovery," stated Akshat Siddhant, Lead Quant Analyst at Mudrex. On the MCX, gold prices were around ₹142,900, slipping 0.12 percent, having rebounded from an opening gap down near ₹142,580. The Indian rupee weakened for the third consecutive day to around ₹95.14 against the US dollar, under pressure from importer dollar demand, higher crude oil prices, and foreign fund outflows.

MCX silver traded at about ₹194,470, a decline of 0.68 percent, partially offset by the rupee's depreciation. The gold-silver ratio stood at approximately 74.8:1, with gold outpacing silver on a relative basis. WTI crude oil declined 0.30 percent to around $100.95 per barrel, as diplomatic negotiations between Saudi Arabia, Pakistan, Turkey, and Iranian leaders fostered optimism regarding a potential de-escalation of hostilities.

Brent crude remained close to $115.10 per barrel. MCX crude oil dropped 1.03 percent to around ₹9,623, testing a crucial support level in the ₹9,500–9,600 range. Supply-side risks, however, persisted. US Strategic Petroleum Reserve stocks had dwindled to their lowest level since October 1982, while ongoing attacks on Saudi infrastructure heightened concerns about supply disruptions.

"The COMEX Gold range can be expected between $3,950–$4,100 ahead of the policy outcome, after which the next trend will depend on the Fed’s decision and commentary," commented Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities. Upcoming US third-quarter GDP and PCE inflation data, scheduled for Thursday, are anticipated to further influence December rate projections.