Gold and silver prices maintained their robust performance on Wednesday, with both metals staying close to their multi-week peaks due to favorable global and domestic factors that bolstered investor confidence. Gold was trading near Rs 1.24 lakh per 10 grams, while silver was holding steady around Rs 1.55 lakh per kilogram.
The surge in precious metals prices coincided with the anticipation of an upcoming rate cut by the US Federal Reserve, alleviating concerns surrounding the extended US government shutdown and the persisting weakness in the dollar index.
Market observers and analysts noted that these developments have set a favorable backdrop for the bullion market, despite some investors taking profits following the recent surge.
Rahul Kalantri, Vice President of Commodities at Mehta Equities Ltd., emphasized the ongoing positive trend in bullion. He mentioned, “Gold and silver are experiencing significant fluctuations in trading. Initial buying pressure drove prices higher, but subsequent profit-taking offset those gains. Nevertheless, both metals are comfortably above their support levels.”
Kalantri highlighted that the weaker US labor market data reinforced expectations for a Federal Reserve rate cut. He stated, “Private employment data indicated ongoing job losses, increasing the market’s likelihood of a 25 basis point cut to 68%.”
Investors are eagerly awaiting official data as the US government nears the end of its prolonged shutdown, which could help alleviate uncertainty, according to Kalantri.
He outlined the support and resistance levels for gold in global markets and India, along with similar details for silver. Meanwhile, Jateen Trivedi, Vice President and Research Analyst at LKP Securities, attributed the recent upward trend in bullion to a mix of technical and macroeconomic factors.
Trivedi explained that gold’s rally to Rs 1,24,800, up 0.70%, was supported by the weakness of the dollar index and optimism surrounding the potential reopening of the US government.
Although positive sentiment in bullion has been fueled by the anticipated reopening of the US government, Trivedi cautioned that volatility is expected to persist in the short term. He indicated that gold is likely to trade within a broad range in the coming days.
Locally, strong demand driven by festivals and wedding seasons has bolstered bullion prices, with Indian investors increasingly viewing gold as a hedge amid global uncertainties and potential shifts in monetary policy.
Silver has mirrored gold’s trajectory, backed by renewed industrial demand and investment interest. A global supply shortage in silver, coupled with robust buying from investors and industries, has maintained elevated prices recently.
Analysts predict that gold and silver may consolidate at current levels before making significant moves. While the metals are fundamentally strong, short-term investors are advised to proceed cautiously given the narrow trading range and potential profit-taking opportunities.
Experts emphasize that while gold and silver serve as attractive long-term hedges against volatility and inflation, investors should remain vigilant against short-term fluctuations.
Given that both metals are approaching resistance levels, a prudent strategy would be to await a price dip before considering new positions rather than chasing the current rally.