Gold and silver prices witnessed a notable uptick on Wednesday, buoyed by robust demand in the spot market and increasing optimism regarding a possible rate cut by the US Federal Reserve in the upcoming month. Both precious metals experienced gains exceeding half a percent during early trade and maintained their upward momentum throughout the afternoon session.
Gold and Silver Extend Gains on MCX
Following a previous day’s increase of over 1%, both gold and silver opened on a strong note on November 26. As the trading day progressed, by around 9:10 am, MCX gold for December futures recorded a rise of 0.50%, reaching Rs 1,25,835 per 10 grams. Simultaneously, MCX silver for December futures climbed 0.91% to Rs 1,57,750 per kg.
Fast forward to 1:30 pm: gold prices were at Rs 1,25,953 per 10 grams, marking a 0.58% increase, while silver saw a more substantial rise of 1.22%, trading at Rs 1,58,222 per kg.
Weak US Data Supports Rate Cut Hopes
Two crucial pieces of economic data from the United States have further fueled speculation regarding a potential easing of interest rates by the Federal Reserve. Retail sales in September exhibited a modest growth of just 0.2%, falling short of expectations and showing a decline from the 0.6% increase seen in August. Additionally, the Producer Price Index (PPI) rose by 0.3%, aligning with market forecasts.
These reports were released later than normal, a consequence of a 43-day government shutdown that caused delays in various economic data disclosures. The subdued retail figures alongside steady producer inflation have helped elevate market expectations of a 25 basis-point rate cut to over 80%.
Geopolitical Easing May Limit Gold’s Upside
Although the anticipation of lower interest rates continues to bolster gold prices, there is noteworthy geopolitical tension that could suppress further gains. Recent developments in the ongoing Russia-Ukraine conflict present a glimmer of hope. US President Donald Trump has announced simultaneous missions to both Moscow and Kyiv to advance a proposed peace plan, stirring speculation about potential resolutions to the protracted conflict.
Key Support and Resistance Levels
Expert insights from Rahul Kalantri, VP of Commodities at Mehta Equities Ltd, indicate that both gold and silver closed near a two-week high. He noted that delayed economic data from the US has heightened expectations for a rate cut in December. The growth of just 0.2% in retail sales indicates softer consumer demand, while the PPI figures met expectations, aiding the case for a more dovish stance from the Federal Reserve.
For global markets, Kalantri outlines that gold has established support levels between $4100 and $4065, with resistance identified at $4170 to $4195. Silver, on the other hand, has support pegged between $51.00 and $50.65 and resistance at $51.85 to $52.20.
In the Indian context, gold support is noted at Rs 1,24,350 to Rs 1,23,580, while resistance lies between Rs 1,25,850 and Rs 1,26,500. For silver, the support is between Rs 1,54,850 and Rs 1,53,600, with resistance found at Rs 1,57,110 to Rs 1,58,000. Kalantri suggests that both gold and silver prices are likely to continue being influenced by global economic indicators, currency fluctuations, and unfolding geopolitical narratives in the near future.
