Gold prices to stay buoyant on Fed cuts, festive buying

Meanwhile, silver has outpaced gold in recent weeks, displaying a sharper trajectory on the back of investment inflows and industrial demand. On the MCX, silver futures closed at Rs1,30,096/kg, while in overseas markets the white metal rose nearly 2% to settle at $42.95/ounce

New Delhi: Gold prices are expected to remain buoyant in the coming week as a combination of global monetary easing, festive demand in Asia, central bank purchases and persistent geopolitical risks will lend support to the precious metal, analysts said.

Traders will closely monitor the upcoming trade negotiations between the US and India, and Washington and Beijing, as well as provisional data on manufacturing and services PMI across regions. In addition, crucial US macroeconomic numbers including housing data, personal consumption expenditures, and consumer sentiment will shape market sentiment, they added.

Pranav Mer, Vice President, EBG – Commodity & Currency Research at JM Financial Services, said: “The bullion is expected to remain supported by firm festive demand in Asia, while ETFs and central banks continue to remain net buyers. Safe-haven buying remains mixed at current high prices.”

On the Multi Commodity Exchange (MCX), gold futures for October delivery surged Rs 1,616, or 1.5 per cent, last week to close at Rs 1,09,900 per 10 grams on Friday. Mer said gold prices recovered from a mid-week dip and ended the week in the green as focus turned to the US economic calendar, particularly inflation and jobs data.

Prathamesh Mallya, DVP – Research, Non-Agri Commodities and Currencies at Angel One, said gold prices has been consolidating after the US Federal Reserve reduced interest rates by 25 basis points and signalled two more cuts in the months ahead.

“Gold prices corrected a little after the event on a rise in the dollar index. However, the direction of the gold markets remain clear and the momentum is on the higher side,” he said. In the international market, gold futures settled at $3,705.80 per ounce on Saturday, after scaling an all-time high of $3,744 per ounce on Wednesday.

“Gold started the week with some profit booking after scaling record highs but losses were limited amid weak US jobs data, and rupee depreciation.

Market sentiment was also influenced by higher-than-expected inflation data, softer labour market numbers, and a sharp drop in non-farm payrolls, leading participants to price in at least a 25 basis points cut,” said Manav Modi, Analyst – Precious Metal -Research, Motilal Oswal Financial Services.