Summary of this article
Gold prices are expected to remain strong in coming week
Investors to focus on US Federal Reserve's monetary policy decision
Gold prices are likely to remain firm in the coming week, driven by investor focus on the US Federal Reserve's monetary policy outcome, combined with weakness in the rupee, according to analysts.
The precious metal's bias remains positive amid expectations of an interest rate cut and sustained central bank purchases, they added.
"Gold is expected to remain on positive side as traders will be focusing on the US Federal Reserve's FOMC meeting outcome and the Fed Chair Jerome Powell's commentary as well, while on the data front, the focus will be on China's trade and inflation data and the US jobs data," Pranav Mer, Vice President, EBG - Commodity & Currency Research, JM Financial Services Ltd, said.
On the Multi Commodity Exchange (MCX), gold futures appreciated by Rs 958, or 0.74 per cent, this week, outperforming the global prices.
"Gold prices in the Indian markets have rallied more than the Comex gold prices on account of rupee depreciation against the dollar. The rupee is now at the highest mark of 90, which makes gold in Indian currency costlier," Prathamesh Mallya, DVP - Research, Non-Agri Commodities and Currencies, Angel One, said.
Mallya added that the rally in gold prices might continue in the week ahead as a boost from the rate cut, increasing central bank demand for gold, and fund buying.
In the international markets, Comex gold futures slipped by USD 11.9, or 0.28 per cent, during the week.
Mer noted that gold prices consolidated within a range during the week but stayed supported by a weaker dollar and rising bets for an interest rate cut by the Federal Reserve (Fed) at its December 10 meeting.
Meanwhile, silver continues to outshine gold, scaling fresh record highs on industrial demand.
On the MCX, silver futures skyrocketed by Rs 8,427, or 4.81 per cent, during the week. On Friday, the white metal surged by Rs 7,096, or 3.98 per cent, to hit a record of Rs 1,85,234 per kilogram.
"In the first half of the week, silver futures spiked close to Rs 1.80 lakh per kg and briefly touched fresh highs. Since then, prices have cooled off slightly but are still sitting on massive month-on-month gains," Chirag Doshi, CIO- Fixed Income, LGT Wealth India, said.
He added that markets are consolidating at higher levels after a strong run, with traders increasingly using sharp intraday spikes in silver as opportunities to book profits.
In the overseas markets, Comex silver futures rose by USD 1.89, or 3.30 per cent, during the week. On Friday, the metal soared by USD 2.4, or 4.19 per cent, to hit a lifetime high of USD 59.90 per ounce.
"Silver prices rose to yet another all-time high and moved close to USD 60 per ounce in the international market, while on the domestic market, prices rose close to Rs 1,90,000 per kg," Mer said, attributing the rally to strong industrial demand and tight supplies.
He added that the momentum could push silver prices towards Rs 2,00,000-2,25,000 levels in the short term.
Analysts said the coming week will be crucial for bullion prices as monetary policy cues from the Fed, macroeconomic data from China and the US, and rupee trends will guide direction.
