Gold, Silver Rates Today: Precious Metals Consolidate; Trade In Range-Bound Manner

Traders continued to focus on precious metals prices, even as volatility in both gold and silver has reduced. Most market experts said that both gold and silver will remain in a consolidation zone, while there remains a more balanced approach between profit booking and buying at dips.

On domestic markets, gold futures for April delivery were trading at Rs. 1.55 lakh per 10 grams, 0.5 per cent down from the previous close. Silver futures for delivery in March were trading at Rs. 2.4 lakh for a kg on the MCX, 1.8 per cent lower from the previous close.

Market participants looked towards macro-economic data from the US during the week, though the government is shut on February 16 due to President’s Day holiday. Investors also remained in a wait-and-watch mode after the sharp correction seen last week.

The volatility in precious metals prices came amid a weak US CPI data, which rose 0.2 per cent in January, compared to expectations of having risen 0.3 per cent by economists. This eased the market’s fears of a sharper rise in US inflation and increased expectations that the US Federal Reserve may resort to cutting interest rates at its upcoming meeting in March. Lower costs of borrowing generally lead to a rise in precious metals prices.

However, the rise was not sustained, resulting in a sharp slip in gold and silver exchange-traded funds (ETFs) and bouts of profit booking. A rebound in precious metals prices was also a result of a rise in the US dollar against its peers. Meanwhile, the Indian rupee was trading at 90.70 against the dollar, 14 paisa lower than the previous close.

How are Gold and Silver Prices Seen Moving?

Market experts said that gold and silver prices will trade in a range-bound manner in the near term, as investors will look forward to US economic data, such as the growth and interest rate trajectory, to gauge the prices of the precious metals. This is amid broader uncertainty in the market and a sell-off seen at the beginning of the month when gold prices in the international markets fell below $4,500.

“We expect a range-bound near-term pattern, with gold and silver prices swinging based on key U.S. economic data (inflation, GDP, Fed policy signals) and ongoing macro uncertainty,” Jigar Trivedi, senior research analyst at Indusind Securities, formerly Reliance Securities, said. “Despite short-term outflows or profit-taking, we still see longer-term fundamental support due to macro drivers like safe-haven demand and central bank buying.”

With flows into ETFs dropping sharply by more than 7 per cent due to recent profit-booking, market participants suggested that for investors looking at long-term investment, slow accumulation at these levels could be an option rather than aggressive buying. Market experts suggested avoiding lump-sum investments at current levels.

ETFs also offer lower entry points after the recent correction, market participants said.

“After the recent downfall in the bullion segment, it's a good time to start buying bullion ETFs in a staggered manner,” Trivedi added.