Gold, silver prices up by 2% today: What's the reason?
What's the story
Gold prices have surged by over 1% in early trade on the Multi Commodity Exchange (MCX) today. The increase comes amid positive global cues and rising expectations of another rate cut by the US Federal Reserve next month. MCX Gold December futures were trading at ₹1,22,426 per 10g today. Meanwhile, MCX Silver December contracts were up by nearly 2% at ₹1,50,579 per kg during the same period.
Economic impact
US government shutdown raises concerns about economic outlook
Rahul Kalantri, VP of commodities at Mehta Equities, said the record-long US government shutdown has raised concerns about the overall economic outlook. This has led to a renewed demand for safe-haven assets like gold. The dollar index also softened, further supporting bullion prices. According to Reuters data, job losses in October were due to cuts in government and retail sectors as well as layoffs announced by companies due to cost-cutting and AI adoption.
Sentiment dip
US consumer sentiment hits lowest level since 2021
US consumer sentiment fell to its lowest level in nearly three-and-a-half years in early November, amid fears of the economic impact of the government shutdown. Job market trends suggest a possible rate cut by the US Federal Reserve at its December policy meeting. The CME FedWatch Tool shows traders are pricing in a 67% chance for such a move.
Price forecast
Gold could rise to ₹1,22,700 per 10g
Jigar Trivedi, Senior Research Analyst at Reliance Securities, said gold has risen over 1% amid fears of the US economy. He predicted MCX Gold December could rise to ₹1,22,700 per 10g with support at ₹1,22,000.
Investment advice
Experts recommend buying gold/silver on dips
Experts expect gold and silver prices to remain volatile in the near term. Manoj Kumar Jain of Prithvifinmart Commodity Research said, "We expect gold and silver prices to remain volatile this week amid volatility in the dollar index, global financial markets ahead of US inflation data, and uncertainty over ending the US shutdown." Jain suggested buying gold/silver on dips as long as support levels are held.