Precious metals extended their upward trajectory on Friday, January 2, marking a second straight session of gains. The rally was fueled by robust demand for safe-haven assets, spurred by expectations of further interest rate reductions from the US Federal Reserve and escalating geopolitical uncertainties worldwide.
MCX Trading Session Sees Strong Gains
The February gold futures contract on the Multi Commodity Exchange (MCX) commenced trading on a positive note. It opened higher at ₹1,36,999 per 10 grams, compared to the previous session's close of ₹1,35,804. The contract subsequently climbed to reach an intraday peak of ₹1,37,098. By 8:10 PM IST, MCX gold was trading at ₹1,36,173 per 10 grams, reflecting a gain of ₹369 or 0.27%.
In the international market, the spot gold price witnessed a more substantial increase of 1.8%, reaching $4,402 per ounce.
Silver prices, which had ended flat on Thursday, also joined the upward movement. The March futures contract for silver on MCX experienced a significant surge, jumping by ₹9,126 per kilogramme. It soared from the previous close of ₹2,35,873 to hit a day's high of ₹2,44,999.
A Record-Breaking Year for Precious Metals
The year 2025 proved to be exceptionally bullish for the entire precious metals complex. Silver led the pack with an extraordinary performance, registering annual gains of 147%, its best year since 1979. This surge was driven by its official designation as a critical mineral in the US, persistent supply shortages, dwindling inventories, and robust industrial and investment demand.
Gold was not far behind, posting a remarkable 64% gain in 2025. This rally was supported by a combination of anticipated Federal Reserve rate cuts, ongoing geopolitical tensions, strong buying from global central banks, and increasing holdings in exchange-traded funds (ETFs).
Other metals also shone brightly. Platinum recorded a 126% surge, marking its strongest performance in 15 years, while palladium rallied by an impressive 81%. It is noteworthy that earlier in the week, profit-taking pressured prices after the CME Group raised margins on precious metal futures, but this did not overshadow the year's overall stellar performance.
Key Drivers Supporting the Rally
Several fundamental factors are currently underpinning the strength in precious metals markets. On the demand front, physical gold traded at a premium in major hubs like India and China for the first time in approximately two months. A recent correction from all-time highs reportedly helped rejuvenate retail buying interest.
The US dollar index, which measures the greenback against a basket of major currencies, was trading with modest gains at 98.43. However, this follows its steepest annual decline in eight years during 2025, fueled by growing market speculation about imminent Fed rate cuts. A weaker dollar makes dollar-priced commodities like gold and silver less expensive for holders of other currencies, thereby supporting demand.
Market sentiment was further bolstered by the minutes from the Federal Open Market Committee's (FOMC) December meeting. The minutes revealed a growing openness among policymakers to ease monetary policy should inflation continue to cool, although officials remained divided on the precise timing and magnitude of potential rate cuts.
Disclaimer: Investors are strongly advised to consult with certified financial experts before making any investment decisions related to commodities or other financial instruments.
