Gold Prices Set for Annual Gains Despite Upcoming Corrections

Gold prices are on track to achieve their first annual gain since 1979, reflecting a remarkable performance amid fluctuating markets. However, analysts anticipate a corrective phase in the near term, as several key economic indicators come into focus. The precious metal has seen a notable retreat of approximately 10 per cent from its record high of over USD 4,390. Despite this decline, gold remains up over 50 per cent year-to-date, marking its strongest performance in over four decades.

Bullion experts suggest that traders will be closely monitoring comments from officials of the US Federal Reserve to gain insights into the future direction of monetary policy, which is expected to influence the near-term trajectory of gold prices. Pranav Mer, Vice President of Commodity & Currency Research at JM Financial Services Ltd, noted that the market should brace for either a consolidation phase or additional corrections as attention shifts to inflation figures, a US Supreme Court hearing on tariffs, speeches from Federal Reserve representatives, and economic data from China.

Prathamesh Mallya, Deputy Vice President of Research at Angel One, commented, “If the current fundamental factors remain, we could witness volatility that might lead to a further rally in gold prices.” This sentiment is echoed by the ongoing dynamics in the international market, where gold futures on the Comex exchange for December delivery rose by USD 13.3, or 0.33 per cent, last week, settling at USD 4,009.8 per ounce on Friday.

Throughout the week, gold hovered around the USD 4,000 per ounce mark, stabilising after experiencing dramatic fluctuations driven by shifting expectations regarding US monetary policy and labour market statistics. The metal saw a brief uptick following reports indicating that US companies announced the highest number of job cuts for October in over 20 years, which bolstered the case for a potential interest rate cut in December. Riya Singh, a Research Analyst at Emkay Global Financial Services, highlighted that mixed signals from Federal Reserve officials, coupled with the lack of crucial inflation data due to the ongoing US government shutdown, tempered the optimism surrounding gold prices.

Singh attributed the recent surge in gold prices to anticipated rate cuts, continued purchases by central banks exceeding 600 tonnes so far in 2025, and steady inflows into gold-backed exchange-traded funds. The factors influencing gold prices are multifaceted, with shifts in investor sentiment and macroeconomic developments playing a significant role.

In addition to gold, silver prices have also been experiencing upward pressure, currently stabilising above the USD 48 per ounce mark. This increase is largely driven by safe-haven demand in light of the uncertainties surrounding the US government shutdown and evolving expectations regarding the Federal Reserve's policy direction. Singh noted that the inclusion of silver, alongside copper and uranium, on Washington's official list of critical minerals represents a significant policy shift that could lead to new tariffs and trade restrictions under the administration's Section 232 investigation, further impacting silver prices.