Gold and Silver Recover Ahead of Key US Fed and Inflation Data
Gold and silver posted a recovery on Monday after several days of consistent losses. Fresh buying in both domestic and international markets helped the metals regain ground at the start of the trading week.
Market watchers caution that the rebound is largely technical in nature. Attention is firmly fixed on the Federal Reserve's October 27-28 policy meeting and the release of US personal consumption expenditure (PCE) inflation data this week.
On the MCX, December gold futures advanced about 0.50 percent, or Rs 761, to around Rs 1,42,733 per 10 grams. December silver futures rose 0.49 percent, or Rs 968, to Rs 1,96,687 per kilogram.
During trade, gold reached a session high of Rs 1,42,888 per 10 grams, rising Rs 864 or 0.60 percent from its previous close of Rs 1,42,024. Silver touched Rs 1,97,186 per kilogram at its peak, a gain of Rs 1,467 or 0.74 percent from Rs 1,95,719.
Prices had come under heavy pressure in the previous week, with gold down nearly 4 percent and silver falling over 7 percent. Investors took advantage of the lower levels to enter the market.
On COMEX, gold traded 0.48 percent higher at $4,027 an ounce in early Monday trade and touched $4,032.90 at its highest. Silver climbed 0.74 percent to $54.35 an ounce and reached $54.47 during the session.
Spot gold had dropped below $4,000 an ounce last week for the first time since July, creating significant pressure. Analysts say the $4,000 level is proving to be a crucial psychological support. Buying returning at this level has provided some stability.
Caution continues to dominate sentiment. Elevated energy prices are stoking inflation concerns, with Brent crude recently trading above $110 a barrel. Such pressures could prompt central banks to postpone rate cuts.
According to expert projections, the chances of a rate increase at the October Fed meeting are limited, but a December hike has not been ruled out. As a result, large players in gold and silver are adopting a wait-and-watch approach.
The PCE inflation numbers due this week will be a decisive factor. If inflation surprises on the upside, interest rates may remain high for a longer period, which would be a negative signal for both metals.
Silver has shown a stronger recovery than gold, with higher percentage gains on both COMEX and MCX. Technical indicators, however, suggest silver is still not completely out of the oversold zone. On MCX, Rs 2.00 lakh to Rs 2.02 lakh per kilogram is considered significant resistance, while Rs 1.92 lakh to Rs 1.94 lakh serves as strong support on the downside.
Crude oil, the dollar index and bond yields will also be closely tracked by investors, as movements in these markets could influence precious metals going forward.