Gold and Silver Prices: Gold and silver prices are set to rise further! Here's the reason behind it..
This year has been phenomenal for the commodities market. Gold and silver, in particular, have given investors strong returns. Experts believe that gold and silver prices could continue their record-breaking rally as investors focus on global inflation data and key macroeconomic indicators that determine the path of central bank policies.
The main focus will be on macroeconomic data, including inflation figures from India, the US, Europe, and the UK, as well as provisional manufacturing and services PMI data from major economies. He added that traders in the US will also be watching non-farm payroll claims, housing data, and consumer sentiment, which will determine the direction of bullion prices.
Pranav Mer, Vice President of EBG Commodity & Currency Research at JM Financial Services, said in a PTI report that the momentum in gold and silver will remain positive as traders focus on key data from China. This will be followed by inflation figures from India, the US, and the UK, as well as provisional manufacturing PMI data from all sectors.
Positive trend in gold
Pranav Mer said that gold prices maintained positive momentum following the Fed rate cuts and liquidity-boosting measures. However, the central bank maintained a cautious stance, indicating that it would wait for more data before providing further easing. This stance led to heavy selling in US Treasuries and put pressure on the dollar index, which supported gold prices.
He further added that geopolitical tensions between the US and Venezuela, along with concerns about unwinding the yen carry trade ahead of the expected 25 basis points rate cut by the Bank of Japan on December 18, have strengthened gold's safe-haven appeal. On MCX, the yellow metal reached its all-time high of Rs 1,35,263 per 10 grams on Friday, supported by a weaker dollar and strong investor buying. Expressing a similar sentiment, Pankaj Singh, founder and principal researcher at Smallcase manager SmartWealth AI, said that the depreciation of the rupee against the US dollar has boosted domestic gold returns.
Why the surge in gold prices?
Pankaj Singh said that gold prices continued their upward trend last week as the rupee fell to a record low against the US dollar amidst trade tensions, tariff uncertainties, and persistent capital outflows. The currency weakness is reinforcing gold's role as a foreign exchange hedge for Indian investors. He added that the medium-term outlook for gold remains positive, as currency trends are influencing domestic prices. In the international market, COMEX gold futures rose by USD 85.3 or 2.01 percent last week.
In the international market, silver futures rose by USD 2.95 or 5 percent last week and crossed the USD 65 per ounce mark for the first time on Friday. Pranav Mer said that silver prices reached another all-time high on Friday and crossed the ₹2,00,000 level in the domestic market. However, the metal prices fell during the US trading session due to sharp selling pressure of over 4 percent.
Investment in ETFs
According to Rhea Singh of MK Global Financial Services, investor participation in precious metals remains strong. She said that India is witnessing record participation in ETFs, while speculative interest has increased in China's silver market, with Shanghai trading volumes returning to levels seen during the previous supply crunch. Singh added that silver is being supported by falling yields, ample liquidity, strong central bank buying, consistent ETF inflows, and robust industrial demand from sectors like solar energy and electronics.
She said that unless there is a significant shift in US monetary expectations, volatility may persist, but precious metals are poised to maintain an upward trend until early 2026. Mer expects the upward trend in silver to continue in the near future. He said that silver prices are looking positive and could rise further to levels of Rs 2,25,000-2,40,000 per kilogram.
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