Gold prices in India extended their winning streak for a fifth consecutive session on Wednesday, December 17, displaying resilience even as the Indian rupee made a strong comeback. The precious metal's journey during the day, however, was marked by significant volatility.
Intraday Swings and Silver's Spectacular Rally
The February gold futures contract on the Multi Commodity Exchange (MCX) commenced trading higher at ₹1,35,79 per 10 grams, compared to the previous close of ₹1,34,409. It soon faced intense pressure, plunging to an intraday low of ₹1,33,373. This dip was primarily driven by a firmer rupee, which typically makes dollar-denominated gold cheaper in the domestic market.
Nevertheless, demonstrating underlying strength, gold rebounded smartly from the day's lows. By 8:40 PM, the contract was trading at ₹1,34,907, marking a gain of 0.40%.
The spotlight, however, was firmly on silver. The March silver futures contract on MCX skyrocketed by 4.2%, scaling a historic peak of ₹2,06,111 per kilogram. This remarkable surge has propelled silver's year-to-date rally to an astounding 135%, nearly doubling the returns from gold over the same period. In the international spot market, silver prices advanced 2.8% to breach the $65 per ounce barrier for the first time, settling at a record $65.63.
Driving Forces: Weak US Data and Geopolitical Risks
Analysts point to a combination of factors fueling the rally in precious metals. Lacklustre economic data from the United States has reinforced expectations of a dovish monetary policy. A recent US labor report revealed that the unemployment rate jumped to 4.6% in November, the highest level since September 2021.
This data has bolstered market speculation that the US Federal Reserve might implement an interest rate cut as early as January. The Fed has already reduced rates three times since September, bringing the benchmark funds rate to a target range of 3.5%–3.75%. Since assets like gold and silver do not offer yield, they become more attractive in a low-interest-rate environment.
Additionally, rising geopolitical tensions are sustaining safe-haven demand. Escalating military activity in Venezuela, following a US-ordered blockade of sanctioned oil tankers targeting President Nicolas Maduro's government, has added a layer of uncertainty to global markets.
Key Levels and the Week Ahead
Market experts have outlined crucial technical levels for both metals. Rahul Kalantri, VP of Commodities at Mehta Equities, noted that gold finds support in the ₹1,33,850–₹1,33,110 range, with resistance at ₹1,34,950–₹1,35,670. For silver, support is seen at ₹1,96,450–₹1,95,280, while resistance lies at ₹1,99,810–₹2,01,270.
The market's focus now shifts to key US inflation indicators due later this week. The Consumer Price Index (CPI) data is scheduled for Thursday, followed by the Personal Consumption Expenditures (PCE) data on Friday.
Jateen Trivedi, VP and Research Analyst at LKP Securities, cautioned that with this data-heavy schedule, gold is expected to remain highly volatile. He projected a broad trading range between ₹1,31,000 and ₹1,36,000 for the precious metal in the near term.
