Gold and silver markets are anticipated to remain vibrant in the upcoming week, driven by a mix of festive-season demand in Asia, central bank acquisitions, and persistent global uncertainties coupled with indications of potential monetary easing from the US Federal Reserve, according to analysts. Market observers are set to keep a close watch on critical US macroeconomic releases, which include housing data, personal consumption expenditures, and consumer sentiment. Additionally, trade discussions between the US and India, as well as Washington and Beijing, will be under scrutiny.
Pranav Mer, Vice President of Commodity & Currency Research at JM Financial Services, emphasized that the bullion market is expected to be bolstered by robust festive demand in Asia. He noted that exchange-traded funds (ETFs) and central banks are likely to remain net buyers, while safe-haven buying is mixed at the prevailing high prices. On the Multi Commodity Exchange (MCX), October gold futures experienced a rise of Rs 1,616, or 1.5 percent, closing the week at Rs 1,09,900 per 10 grams.
Mer highlighted that gold prices rebounded from a mid-week dip, ending positively as market focus shifted towards the US economic calendar, particularly in terms of inflation and employment data. Prathamesh Mallya, DVP of Research at Angel One, pointed out that gold prices have been consolidating following the Federal Reserve’s recent 25 basis points rate cut, with indications of additional cuts on the horizon. Although gold prices saw a slight correction due to an uptick in the dollar index, Mallya noted that the overall direction of gold markets remains upward.
In the global arena, gold futures concluded the week at USD 3,705.80 per ounce on Saturday, after reaching an all-time high of USD 3,744 per ounce earlier. Manav Modi, a precious metal analyst at Motilal Oswal Financial Services, explained that while gold started the week with some profit-taking after hitting record highs, losses were mitigated by disappointing job data and a depreciating rupee. The sentiment in the market was also impacted by higher-than-anticipated inflation data, soft labor market statistics, and a significant decrease in non-farm payrolls, leading traders to anticipate at least a 25 basis points rate cut.
Geopolitical tensions in regions like the Middle East and Eastern Europe have added a layer of risk that further supports safe-haven demand for gold. Riya Singh, a commodities and currency research analyst at Emkay Global Financial Services, forecasts a medium-term upside for gold, projecting prices could reach between USD 3,850 and USD 4,000 per ounce if US inflation continues on a downward trend and the Federal Reserve implements the anticipated cuts.
Silver has seen a stronger performance than gold in recent weeks, benefiting from both investment inflows and rising industrial demand. On the MCX, silver futures settled at Rs 1,30,096 per kilogram, while international silver prices increased nearly 2 percent to finish at USD 42.95 per ounce on Saturday, having reached USD 43.43 during the week. Singh noted that silver has taken on a more aggressive trajectory, breaking above the USD 40 level for sustained periods, which is the first occurrence since 2011, reflecting robust investment demand and supply constraints.
Industrial demand for silver has surged, particularly from sectors such as solar panel manufacturing, electric vehicles, 5G infrastructure, and battery storage. Singh pointed out that silver’s share of module costs has tripled in just two years, raising concerns for solar producers while simultaneously tightening the physical market. Demand from electric vehicles and 5G technology continues to increase at double-digit rates, counterbalancing weaker demand from the photography and jewelry sectors.
Supply constraints, particularly stagnant mine production from a limited number of regions, further underpin silver prices. Singh projects that silver prices may target USD 49 to USD 50 per ounce in the coming months in international markets. Mer echoed this view, suggesting that domestic silver prices could reach between Rs 1,40,000 and Rs 1,50,000 per kilogram.
Analysts have cautioned that while global demand factors and festive buying may uphold momentum in the precious metals market, volatility is expected to persist due to fluctuating US economic data, currency movements, and ongoing geopolitical developments.
