Precious metals experienced a significant rally on Monday, November 9, extending their recovery after a period of volatility. Just a day after the Diwali celebrations, gold and silver regained their luster, with international gold climbing above $4,100 per ounce and silver surpassing $53 per ounce.
On the Multi Commodity Exchange (MCX), gold traded at ₹1,43,750 per 10 grams, an increase of 0.84%. Silver also saw a substantial gain, rising 1.62% to ₹1,88,102 per kilogram. This surge was underpinned by several key factors in the global economic landscape.
Key Drivers Behind the Precious Metals Rally
Several macroeconomic factors are contributing to the upward momentum in gold and silver prices:
- Softer Crude Oil Prices: Oil prices eased after US President Donald Trump indicated that further attacks on Iran were unlikely, suggesting diplomatic efforts were progressing. Lower crude prices typically reduce inflationary pressures, which can make non-yielding assets like gold more attractive.
- Easing Inflation Concerns: The softening in crude oil prices has also helped temper broader inflation expectations, lessening the likelihood of central banks needing to keep interest rates higher for longer.
- Continued Central Bank Buying: China's central bank extended its gold-buying spree for the 24th consecutive month, increasing its holdings to 78.3 million ounces. Such consistent institutional demand provides strong support for precious metal prices.
- Stronger US Employment Data: While softer oil prices eased inflation concerns, robust US employment data complicated the outlook. October unemployment fell to 4.1%, reinforcing market expectations of a December rate hike, which can sometimes temper gold's appeal, but was outweighed by other factors in this instance.
Expert Outlook and Price Targets
Amit Gupta, Senior Research Head at Kedia Advisory, noted that the gains in gold prices were primarily driven by softer oil prices easing inflation concerns. However, he also highlighted that the strong US employment data still points towards potential interest rate hikes.
Gold Price Targets
Gupta projects that international gold could test resistance levels between $4,160 and $4,220 if it maintains its position above $4,080 per ounce. For MCX gold, the target range is set between ₹1,44,500 and ₹1,46,000 per 10 grams.
Silver Price Targets
For silver, a sustained international move above $50 per ounce could pave the way towards $55–$58. On the MCX, silver could target levels between ₹1,90,000 and ₹1,94,000 per kilogram.
What Investors Should Watch Next
Investors are now closely monitoring upcoming US inflation data and signals from the Federal Reserve. These indicators will provide crucial cues regarding the future direction of monetary policy and, consequently, the next significant moves in precious metal markets.
“Gold prices extended gains as softer oil prices eased inflation concerns. However, stronger October US employment data, with unemployment falling to 4.1%, reinforced expectations of a December rate hike. China's central bank extended its gold-buying streak to 24 consecutive months, providing support to the precious metal.” – Amit Gupta, Senior Research Head, Kedia Advisory.