Gold and Silver prices soar amid dollar weakness, yellow metal hits new high

Gold prices opened on the Multi Commodity Exchange (MCX) on Thursday at Rs 65,800 per 10 grams and hit an intraday low of Rs 65,771. In the international market, prices hovered around $2,169.65 per ounce.

Meanwhile, silver opened at Rs 75,349 per kg and hit an intraday low of Rs 75,210 on the MCX. In the international market, the price hovered around $24.92 per ounce.

Anuj Gupta, Chief of Commodity and Currency at HDFC Securities, said, “Yesterday, gold prices increased by 0.7% and closed at 65897 levels. Recently, gold made a new high of 66356 levels. Silver prices increased sharply by 1.79% and closed at 75170 levels.”

“Gold and silver prices increased sharply due to the weakness in the Dollar and safe-haven demand caused by geopolitical tension between Russia and Ukraine. Silver is trading at three-month high levels, and gold is trading near lifetime high levels.”

COMEX Gold prices rose almost 0.7% on Wednesday as investors likely ignored the recent uptick in US inflation numbers for February, based on the expectation that the labour market slowdown might prompt the Fed to cut rates in June. Data released this week showed that the headline CPI unexpectedly rose to 3.2% y/y (0.4% m/m) in February compared with 3.1% in January. Meanwhile, geopolitical tensions remain high with Ukraine drone attacks on Russia and stalled Israel peace talks, per Kotak Securities Research Report.

Robust central bank buying has been supporting prices at a time when ETFs have been witnessing continuous outflows. Today, the focus will be on US weekly jobless claims, PPI, and retail sales data to provide more clues on the Fed’s policy path. The producer price index reading, due later today, will be the final inflation report before next week’s Fed rate decision. According to the Kotak Securities Research Report, policymakers are expected to hold borrowing costs steady for a fifth straight meeting, with swaps markets anticipating a cut in June.

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COMEX Silver prices rose more than 3% on Wednesday, tracking gains in bullions and industrial metals. Prospects of rate cuts are also aiding the metal. Both the Fed and the ECB are expected to start loosening monetary policy in June, while the Bank of England will likely deliver its first rate cut in August. At the same time, investors are also assessing the fallout of the nation’s Chinese retail developers. 

According to Kotak Securities Research Report, weakness in China’s property sector has been one of the major factors that has capped the gains in silver prices over the past few years.