Gold Gains, Silver Drops As Traders Await Fed Policy Outcome

Gold prices edged higher to Rs 1,30,638 per 10 grams while silver futures eased to Rs 1,82,600 per kg on Monday as investors turned cautious ahead of the US Federal Reserve's final policy meeting of the year.

On the Multi Commodity Exchange (MCX), gold futures for February 2026 contract increased by Rs 176, or 0.13 per cent, to Rs 1,30,638 per 10 grams in a business turnover of 13,134 lots.

Last week, the precious metal appreciated by Rs 958, or 0.74 per cent. However, silver futures depreciated by Rs 808, or 0.44 per cent, to Rs 1,82,600 per kilogram in 14,281 lots.

On Friday, the white metal had surged by Rs 7,096, or 3.98 per cent, to hit a record of Rs 1,85,234 per kilogram, before settling at Rs 1,83,408 per kg on the MCX.

Over the past week, silver had skyrocketed by Rs 8,427, or 4.81 per cent.

"Silver, which rose more than 3 per cent last week, saw some early-week profit-taking but remains underpinned by tightening inventories in London and China and a structural deficit expected to persist into 2026," Manav Modi, Analyst – Precious Metal -Research, Motilal Oswal Financial Services Ltd, said.

He added that strong industrial demand, sustained safe-haven flows, and highest weekly Exchange Traded Fund (ETF) inflows since July have reinforced bullish momentum in the white metal.

"Overall, precious metals traded firm as markets increasingly priced in imminent Fed easing heading into the final policy meeting of the year," Modi added.

In the international markets, gold held steady as investors are awaiting the Federal Reserve's decision on interest rates. On the Comex, gold futures for February delivery were trading flat at USD 4,244.2 per ounce. The precious metal eased by USD 11.9, or 0.28 per cent, in the last week.

"Gold prices hovered near USD 4,200 per ounce, stabilising after a mild weekly decline, as traders awaited the Federal Reserve's final policy meeting of the year, where officials are widely expected to cut interest rates," Jigar Trivedi, Senior Research Analyst at Reliance Securities, said.

According to Trivedi, market participants are pricing an 88 per cent probability of a 25 basis points rate cut, with expectations of two more reductions next year.

Comex silver futures for March 2026 contract fell 0.54 per cent, to USD 58.73 per ounce. On Friday, the white metal had soared by USD 2.4, or 4.19 per cent, to hit a lifetime high of USD 59.90 per ounce.

In the past week, silver futures had risen by USD 1.89, or 3.30 per cent. Manav Modi of Motilal Oswal Financial Services said investors this week will focus not only on the last Fed's policy meeting, but also on US factory orders and other crucial macroeconomic data.

However, traders will remain cautious until Federal Reserve Chair Jerome Powell's speech, as any shift in tone could trigger volatility in bullion prices, he noted.