Both gold and silver prices continued their upward trajectory during Wednesday's trading session, buoyed by a persistent decline in the US Dollar Index. This drop made dollar-denominated commodities more affordable for investors holding other currencies, fueling demand for precious metals.
Gold Futures Scale New Heights
After surpassing ₹1,662 per 10 grams in the previous session, February gold futures opened higher at ₹1,59,900 per 10 grams. Maintaining strong momentum, the contract soared to a fresh record high of ₹1,64,900, marking a gain of ₹7,201 and crossing the ₹1.64 lakh threshold for the first time ever. This remarkable rally has contributed to a substantial 21% increase in gold prices so far in January.
Silver's Spectacular Surge
In an even more impressive performance, March silver futures skyrocketed by ₹26,821 per kilogram to reach another historic peak of ₹3,83,100. This surge brings silver tantalizingly close to the ₹4 lakh mark, breaking analysts' projections much earlier than anticipated. So far this month, silver has gained a massive 62%, following an extraordinary 170% gain in 2025.
US Dollar Near Four-Year Low
The US Dollar Index, which measures the greenback against a basket of six major currencies, edged up 0.3% to 96.216 but remained near four-year lows. The currency had plunged 1.28% to a four-year low in Tuesday's session after former US President Donald Trump stated he was unconcerned about the dollar's recent decline, adding that it had not fallen excessively.
The dollar's weakness was further exacerbated by Trump's comments that he would soon announce his nominee for Federal Reserve chair and his prediction that interest rates would decline once the new appointee assumes office. Gold, which does not yield interest, typically benefits from low-interest-rate environments. Additionally, growing speculation about potential joint US-Japan currency intervention to bolster the yen added further pressure on the dollar.
The world's reserve currency fell over 9% in 2025, marking its steepest annual decline since 2017. Losses have extended into early 2026, with the dollar dropping another 2.07% so far this year.
US Fed Likely to Pause Rate Cuts
The US Federal Reserve is set to announce its first policy decision of 2026 later today, with markets widely expecting a pause in the rate-cut cycle. The Fed had lowered rates at each of its last three policy meetings, reducing the benchmark lending rate by a quarter percentage point on each occasion, bringing rates to a range between 3.50% and 3.75%.
However, investors will closely monitor any cues regarding the timing of future rate cuts. The recent rate reductions were supported by a cooling labor market. Analysts, however, anticipate that solid GDP growth, relatively low unemployment, and persistent inflation may lead Fed officials to adopt a cautious, wait-and-see approach in the near term.
Disclaimer: We advise investors to consult with certified financial experts before making any investment decisions.
