Gold and silver prices: Gold and silver have become costlier in international markets; find out the reason behind the rise..
Gold and silver prices: Gold and silver prices saw an uptick in the international market. Investors were awaiting further cues regarding US inflation data and the Federal Reserve's interest rate outlook. On COMEX, gold futures were trading at $4,229.80 per ounce, up $13.50 or 0.32% from the previous closing price of $4,216.30. At the time of writing, silver futures had risen by $0.437 or 0.72%, reaching $61.485 per ounce.
US Consumer Price Index (CPI), producer price data, and retail sales figures due this week will provide insights into inflation and the state of the economy. Higher energy costs could drive up inflation, potentially influencing the Federal Reserve's decisions on interest rates.
Gold, which does not generate interest income, can face pressure when interest rates rise, as investors tend to favor yield-generating assets. However, a weaker dollar and lower bond yields could support demand for the metal.
Reasons for the rise
According to data, COMEX gold futures for December delivery rose 1.3% last week to close at $4,216.30 per ounce, while silver climbed over 1% to reach $61.05 per ounce.
This recovery followed a weakening US dollar and a decline in Treasury yields. Silver also received support from gains in industrial metals like copper and zinc.
However, expectations of a tight monetary policy could limit further gains. The market is assessing whether persistent inflation will prompt the Federal Reserve to raise interest rates in October or push any potential hike to December. Geopolitical tensions and fluctuations in crude oil prices remain other factors influencing market sentiment.
Will domestic prices follow global trends?
Fluctuations in the rupee will be a crucial factor for Indian bullion prices. A weakening rupee increases the cost of imported gold and silver, potentially limiting the impact of any decline in international prices. Conversely, a strengthening rupee could mitigate the impact of rising global prices.
Jatin Trivedi, Vice President and Research Analyst (Commodities and Currency) at LKP Securities, believes that due to the rupee's weakness, gold and silver prices will remain range-bound with a slight upward bias.
He noted that investors would be watching inflation data from India, China, and the US, as well as China's trade data and statements from Federal Reserve officials, for further cues.
On the Multi Commodity Exchange (MCX), gold futures for December delivery rose by ₹1,109—or approximately 1%—last week, closing at around ₹1.51 lakh per 10 grams. Silver futures saw a marginal decline, falling by ₹122 to close at around ₹2.25 lakh per kilogram.
What should investors watch out for?
US inflation data and policy signals from the Federal Reserve will be key factors for international bullion prices in the near term. For domestic buyers and investors, the movement of the rupee will also determine how global price changes impact rates in the Indian market. Trivedi's assessment indicates that instead of moving consistently up or down, prices will remain within a range and exhibit a slight upward trend.
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