As the gold market braces for the near term, analysts predict that prices are likely to trade within a tight range. Investors are keenly awaiting key U.S. economic indicators, including GDP and inflation data, alongside signals from the Federal Reserve’s upcoming December policy meeting. These elements are expected to significantly influence the direction of interest rates, which in turn will impact gold prices.
Economic Indicators and Their Impact
Pranav Mer, Vice President of EBG – Commodity & Currency Research at JM Financial Services Ltd, emphasizes that gold may continue to consolidate as market focus remains on U.S. economic data. Key metrics such as housing statistics, consumer confidence, jobless claims, GDP, and PCE inflation numbers will be closely monitored. These indicators are crucial as they provide insights into the health of the U.S. economy and the potential trajectory of monetary policy.
Volatility and Global Cues
Last week, gold futures on the Multi Commodity Exchange (MCX) for December delivery rose by Rs 630, or 0.51%. This increase was attributed to sharp price swings influenced by hawkish commentary from the Federal Reserve, diminishing hopes for a rate cut in December, and a stronger dollar. Mer notes that the expectations surrounding the end of the Russia-Ukraine conflict have reduced risk premiums, while central bank purchases—particularly from China, which has added gold for the 12th consecutive month—have bolstered prices.
In global markets, Comex gold futures gained USD 51.4, or 1.25%, during the week. However, Pankaj Singh, Investment Manager at smallcase and Founder of SmartWealth.ai, points out that a stronger dollar has kept sentiment in check. The minutes from the Federal Open Market Committee (FOMC) suggested that policymakers may maintain elevated rates through 2025, reducing the odds of a December rate cut to just 36%. The thin liquidity typical of the holiday season could further contribute to market volatility.
Record Highs and Rate Concerns
Riya Singh, a Research Analyst at Emkay Global Financial Services, highlights that gold has experienced a pullback after reaching record highs in October. Historically, gold tends to underperform when expectations for rate easing are delayed. Despite this, the metal remains up approximately 55% for the year, buoyed by earlier rate cuts, central bank accumulation, and ETF inflows. Singh describes recent gains as part of a “debasement trade,” where investors are moving away from sovereign debt.
Looking ahead, the medium-term outlook for gold appears constructive. Expectations for policy easing in 2026, ongoing geopolitical uncertainties, and robust official-sector demand are likely to support a broader uptrend in gold prices.
Silver Trends and Technical Outlook
While gold garners much attention, silver has also shown notable trends. Silver futures on MCX for December delivery fell by Rs 1,867, or 1.12%, last week, with Comex silver futures declining by 1.52%. Mer notes that silver has become volatile, mirroring trends in industrial metals. The current momentum appears “sideways/corrective,” with resistance levels identified at Rs 1,56,700-1,59,200 per kg and support at Rs 1,49,500. A breakdown below this support could trigger further declines, potentially reaching Rs 1.39-1.40 lakh per kg.
Analysts suggest that while safe-haven demand may provide some support for gold, elevated interest rates and a firm dollar could cap gains in the near term.
Conclusion
In summary, the gold market is navigating a complex landscape shaped by economic indicators and Federal Reserve signals. As investors await critical data and policy decisions, gold is likely to remain in a tight trading range. While the medium-term outlook remains positive, influenced by geopolitical uncertainties and central bank demand, immediate challenges such as interest rate concerns and dollar strength could temper gains. As always, investors should remain vigilant and informed, keeping an eye on the evolving economic landscape.
(Disclaimer: Recommendations and views on the stock market, other asset classes, or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India.)
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