Gold and Silver prices opened lower on Friday, January 16, extending their losses from earlier in the week as firmer-than-expected US economic data lifted the dollar and dampened hopes of near-term interest rate cuts by the Federal Reserve. The retreat follows both metals touching record highs earlier this week.

MCX Futures Performance

Indian commodity markets reflected the global weakness in precious metals. The following table shows the current MCX futures performance:

Silver futures experienced a more significant decline, retreating from their record high of ₹2,92,960 per kg reached in the previous session.

Global Market Dynamics

Spot gold dipped 0.30% to $4,601.53 per ounce by 0217 GMT, pulling back from Wednesday's record high of $4,642.72. US gold futures for February delivery also slipped 0.40%, trading at $4,605.20. Silver saw a steeper decline, falling 1.60% to $90.80 per ounce after touching an all-time high of $93.57 in the previous session.

Despite the pullback, gold remains on track for a weekly gain of nearly 2%, while silver is set to log a strong weekly gain of about 13%.

Economic Data Impact

The US Dollar Index (DXY) is hovering around 99.31, marginally down by 0.01 points. However, the dollar firmed up and is heading for a third straight weekly advance after the Labour Department reported weekly jobless claims dropped to 198,000, well below the consensus estimate of 215,000. This signals continued strength in the labor market and reduces expectations for aggressive Federal Reserve rate cuts.

Physical Gold Rates Across Indian Cities

Current physical gold prices across major Indian cities show regional variations:

Additional Market Developments

Several factors contributed to the current market sentiment. The safe-haven appeal of gold was tempered by easing geopolitical concerns, with Trump indicating that fatalities linked to Iran's protest crackdown appeared to be decreasing. Additionally, China's central bank announced targeted rate cuts on Thursday aimed at propping up economic momentum, while Poland's central bank revealed plans to raise its gold reserves to 700 tonnes.

Gold, which doesn't yield interest, tends to benefit when interest rates are low. However, with rate cuts now seen as less likely in the near term, the opportunity cost of holding gold rises, creating downward pressure on prices.

Gold and silver prices extended their decline on Friday as stronger-than-expected US economic data strengthened the dollar and diminished expectations for Federal Reserve interest rate cuts in the near term. The precious metals faced headwinds from improved economic indicators that reduced their safe-haven appeal.

Current Market Performance

Spot gold prices and futures showed mixed movements amid the changing economic landscape:

US Economic Data Impact

The US Labor Department released encouraging employment data that significantly influenced precious metals trading. Weekly initial jobless claims for state unemployment benefits dropped by 9,000 to a seasonally adjusted 198,000, substantially below economists' expectations of 215,000 claims polled by Reuters.

This positive employment data contributed to the dollar's strength, marking its third consecutive weekly gain. A firmer dollar makes greenback-priced metals more expensive for overseas buyers, reducing international demand. Additionally, gold as a non-yielding asset typically benefits from low interest rates because they reduce the opportunity cost of holding the precious metal.

Silver and Other Precious Metals Performance

Silver experienced more pronounced declines compared to gold, though it maintained strong weekly performance:

Individual investors have been purchasing silver at an unprecedented pace, making it the most crowded commodity trade in the market according to a Thursday report by Vanda Research. TD Securities closed a short silver position after prices hit their exit level at $93.15 per ounce, resulting in a theoretical loss of approximately $606,000.

Global Developments and Market Factors

Several international developments influenced precious metals markets. Gold's safe-haven appeal weakened as geopolitical tensions showed signs of easing. President Trump indicated that fatalities in Iran's protest crackdown were declining and expressed belief that authorities were not planning mass executions.

China's central bank announced sector-specific interest rate cuts on Thursday to provide early economic stimulus. Meanwhile, Poland's central bank expressed intentions to increase gold reserves to 700 tons, according to statements from the bank's governor.

Investment Fund Activity

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, reported its holdings increased by 0.05% to 1,074.80 tons on Thursday, indicating continued institutional interest despite short-term price pressures.

The precious metals market continues to balance between safe-haven demand and economic optimism, with upcoming industrial production data from the US scheduled to provide additional market direction.