Gold and silver prices stabilise after sharp rally

Gold opened on the Multi Commodity Exchange (MCX) on Friday at Rs 62,550 per 10 grams and hit an intraday low of Rs 62,479. In the international market, prices hovered around $ 2,035.33 per troy ounce.

Meanwhile, silver opened at Rs 75,083 per kg, hit an intraday low of Rs 74,959 on the MCX, and hovered around $24.11 per troy ounce in the international market.

Manav Modi, Analyst, Commodity and Currency, MOFSL, said, “Gold and silver price steadies after rallying sharply in the earlier session as prospects of the U.S. Federal Reserve lowering borrowing costs dented the dollar and Treasury yields, boosting demand for the safe-haven asset.”

The Fed left interest rates unchanged on Wednesday and Chair Jerome Powell said the historic tightening of monetary policy is likely over, with a discussion of cuts in borrowing costs coming “into view”.

Anuj Gupta, Head of Commodity and Currency at HDFC Securities, said, “The U.S. inflation rate slowed slightly every year, as expected in November. Annual headline consumer price growth edged down to 3.1% last month, decelerating from 3.2% in October, which will likely factor into how Federal Reserve officials see interest rates evolving next year.”

“Along with its more neutral outlook, the dot plot indicated that the central bank sees the Federal Funds rate at 4.6% by the end of 2024, down from September's forecast of 5.1%," said Modi.

According to the economic projections, the central bank sees GDP growing 1.4% next year, down from the previous estimate of 1.5%, while the inflation forecast is at 2.4% in 2024.

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The dollar was heading for a weekly drop after hitting a four-month low. Benchmark U.S. 10-year bond yield, meanwhile, hovered near its lowest level since July. BOE and ECB also kept their rates unchanged; the ECB pushed back against bets on imminent cuts to interest rates on Thursday by reaffirming that borrowing costs would remain at record highs despite lower inflation expectations.

“US Retail sales unexpectedly rose, and the weekly jobless claims dropped, weighing on Gold and Silver. Focus today will be on manufacturing and Services PMI from major economies and US IIP data," said Modi.

Amit Khare, Associate Vice President at GCL Broking, “February Gold closed at 62454(2.04%) and March Silver closed at 75076(4.96%). Traders are advised to make fresh buy positions in Gold and Silver near given support level one with the stop loss of support level two and book near given resistance levels: Gold February Support 62100/61800 and Resistance 62600/62800. Silver March Support 74500/73500 and Resistance 76000/77000.”