In early trading on Friday, both gold and silver exhibited a rebound from their recent lows. The October futures contracts for gold commenced at Rs 1,09,365 per 10 grams, reflecting an increase of Rs 313, or 0.29%. Meanwhile, the December futures contracts for silver opened with a notable rise of nearly 1%, amounting to Rs 1,200, bringing the price to Rs 1,28,322 per kilogram.
This stands in contrast to the international market, where gold prices remained stable on Friday. The Federal Reserve’s decision to implement a 25-basis-point rate cut, along with the anticipation of additional easing in the forthcoming months, did not align with the dovish expectations of investors. Meanwhile, markets are keenly awaiting further indications regarding the trajectory of U.S. policy. As of 0311, spot gold exhibited minimal fluctuations, remaining steady at $3,646.23 per ounce. The Federal Reserve resumed its rate cuts on Wednesday, signaling a potential for further easing in monetary policy. However, this message was tempered by cautions regarding persistent inflation, which has introduced uncertainty about the speed of future easing measures.
Fed Chair Jerome Powell characterised the policy action as a risk-management cut in response to the weakening labour market, indicating that the central bank was in a “meeting-by-meeting situation” regarding the rate outlook. Market participants are currently assigning a probability of 92% to the likelihood of an additional 25-basis-point reduction at the Federal Reserve’s upcoming meeting in October. Decreased interest rates diminish the opportunity cost associated with maintaining non-yielding bullion assets. On Thursday, gold and silver concluded their trading sessions on a mixed note within the domestic market, while exhibiting a slightly weaker performance in the international markets. The October futures contract for gold concluded at Rs1,09,052 per 10 grams, reflecting a decline of 0.70%. In contrast, the December futures contract for silver settled at Rs1,27,132 per kilogram, marking an increase of 0.12%.
Gold and silver continued their decline in the international markets, driven by profit-taking following a robust recovery in the dollar index from its low in February 2022. The yields on U.S. 10-year bonds experienced a significant rebound, surpassing the 4.10% threshold once more. As of today, the US Dollar Index, was positioned close to the 97.42 level, reflecting an increase of 0.07, which translates to a percentage change of 0.07%. Furthermore, the Bank of England maintained its policy rates at 4.0% during its policy meeting on Thursday, which also constrained the upward movement of gold and silver prices. “The global equity markets experienced an uptick following the Federal Reserve’s rate cuts, which subsequently reduced the demand for safe-haven investments in precious metals.”
“However, geopolitical tensions and central banks’ buying could support gold and silver prices at lower levels,” stated Manoj Kumar Jain. “We anticipate that gold and silver prices will exhibit volatility during today’s trading session, influenced by fluctuations in the dollar index as well as the broader global financial markets. Gold is projected to trade within a range of $3,634 to $3,720 per troy ounce, while silver is expected to fluctuate between $41.20 and $42.70 per troy ounce during today’s session,” he added.