Analysts predict that prices of gold and silver will maintain their firm stance in the coming week, as traders navigate heightened geopolitical uncertainties and await a crucial verdict from the US Supreme Court on former President Donald Trump's tariff policy. Market participants are also gearing up to scrutinise a slew of key economic indicators for fresh directional cues.
Market Momentum and Key Drivers
Bullion markets exhibited strong momentum in the past week. On the Multi Commodity Exchange (MCX), gold futures (February) surged by Rs 3,058, or 2.25 per cent, to settle at Rs 1,38,819 per 10 grams on Friday. Prathamesh Mallya, DVP – Research at Angel One, noted that while gold remained volatile, it ended higher, signalling a firm underlying trend. He added that from a technical perspective, gold could test the Rs 1,41,000 per 10 grams level in the week ahead.
Silver outperformed, with MCX futures skyrocketing by Rs 16,409, or 6.94 per cent, over the week. The white metal scaled a record peak of Rs 2,59,692 per kg before closing at Rs 2,52,725 per kg. In international markets, spot gold climbed 4% to $4,500.90 per ounce, while silver jumped nearly 12% to $79.34 per ounce.
Geopolitical Tensions and Safe-Haven Demand
Pranav Mer, Vice President at JM Financial Services Ltd., attributed the strength in precious metals to safe-haven demand fuelled by elevated geopolitical risks. He pointed to several flashpoints supporting this demand:
- The capture of Venezuela's President and control over its oil flows.
- Escalation in the Russia-Ukraine conflict.
- Unrest in Iran and broader regional frictions.
Mer stated, "The bullions are expected to continue their positive momentum and corrective moves should be a buying opportunity." He emphasised that the focus will remain on the US Supreme Court hearing regarding Trump's trade tariffs and the related geopolitical issues. For silver, he sees a bullish structure that could push prices towards Rs 2,80,000-3,00,000 per kilogram.
Critical Data and Events to Watch
Analysts have identified several immediate triggers that will guide bullion prices:
- US Supreme Court Verdict: The impending decision on Trump-era tariffs is a major event that could influence global risk sentiment and currency movements.
- Inflation Data: Key consumer price index (CPI) readings from the US, India, and Germany will be closely monitored for hints on future monetary policy.
- Central Bank Commentary: Statements from US Federal Reserve officials will be parsed for clues on the interest rate trajectory.
- Economic Indicators: Trade and investment numbers from China, along with US jobs data, will provide insights into global economic health.
Mallya of Angel One concurred, noting that "Dollar movement, Federal Reserve’s next moves, inflation and jobs data are going to be the movers for the bullion prices in the short-term." Mer also highlighted that intermittent strength in the US dollar had capped gains at times, but exchange-traded funds continued to see inflows as investors seek portfolio protection.
In the near term, the bullion market is expected to remain highly sensitive to macroeconomic developments and geopolitical headlines, with analysts advising investors to view any price dips as potential buying opportunities in an otherwise firm market.
