Gold prices traded higher on the MCX in early deals on Wednesday, December 10, ahead of the US Fed policy outcome. MCX gold February futures were 0.20% up at ₹ 1,30,369 per 10 grams around 9:05 am, while MCX silver March contracts were 1.14% up at ₹ 1,90,210 per kg at that time.
The US Federal Reserve is all set to announce its policy decision on today, December 10, amid signs of a cooling labour market and inflation that remains above the Fed’s 2% goal.
The Personal Consumption Expenditures (PCE) price index – the Fed’s preferred inflation measure – rose 0.3% in September, matching August’s increase. On a yearly basis, the index climbed 2.8%, slightly higher than the 2.7% gain recorded in August.
Initial jobless claims in the US fell to 1,91,000 for the week ending November 29 – the lowest level in over three years and well below the forecast of 2,20,000.
Comerica Economics expects the Federal Open Market Committee (FOMC) to reduce the federal funds rate by 25 basis points to a range of 3.50%-3.75% at its final meeting of the year on Wednesday.
Although hopes of interest rate cuts support gold, rising bond yields continue to pressure prices. On Monday, the benchmark US 10-year Treasury yield climbed to its highest level in two and a half months.
According to Manoj Kumar Jain of Prithvifinmart Commodity Research, Gold and silver posted solid gains ahead of the FOMC meeting outcomes and rate cut optimism. Silver prices hit new records and closed above $60 per troy ounce for the first time in the international markets.
“A prices move from $50 to $60 per troy ounce came in just 12 trading sessions. Physical delivery shortages and strength in the industrial metals are supporting silver prices. Gold is also sustaining above $4,200 levels. Market is expecting 25 basis point rate cuts in the Fed meetings but Powell’s comment on the further monetary easing could be directional for the precious metals. Gold and silver could hold its key support levels of $3,960 per troy ounce and $54.40 per troy ounce respectively in the international markets,” Jain said.
Gold and silver: Key levels to watch
Rahul Kalantri, VP Commodities, Mehta Equities, said that gold has support at $4175-4145 while resistance at $4270-4295. He added that in INR gold has support at Rs1,29,450-1,28,750 while resistance at Rs1,30,950-1,31,700.
Meanwhile, on the silver outlook, Kalantri said that silver has support at $60.70-59.85 while resistance is at $61.95-62.45. Looking ahead, the white metal has support at Rs1,86,750-1,85,200 while resistance at Rs1,89,810, 1,90,670.
Manoj Kumar Jain of Prithvifinmart Commodity Research further expects that the gold and silver prices to remain volatile this week amid volatility in the dollar index, volatility in the global financial markets and ahead of the Fed meeting outcomes and gold are expected to trade in the range of $3,960-4,380 per troy ounce and silver is expected to trade in the range of $54.40-62.80 per troy ounce this week.
“Gold has support at $4200-4164, while resistance at $4258-4300 per troy ounce and silver has support at $59.80-59.10, while resistance is at $61.20-62.00 per troy ounce in today’s session. At mcx, gold is having support at 129500-128800 and resistance at 130660-131200 while silver is having support at 186600-185000 and resistance at 190000-192400. We suggest buying gold around 129600-129200 range with a stop loss of 128800 for the target of 130600-131200 and also suggest buying silver around 185500 with a stop loss below 181000 for the target of 190000-194000,” Jain added.