Gold prices to stay buoyant on Fed cuts, festive buying and global concerns

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.

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.

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 USD 3,705.80 per ounce on Saturday, after scaling an all-time high of USD 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.

On the geopolitical front, tensions in the Middle East, and in Eastern Europe, have added a risk premium, supporting safe-haven demand. The precious metal briefly retreated nearly 1 per cent post-policy but continues to hover close to historic peaks as investors weigh Fed guidance and geopolitical risks, Modi added.

Riya Singh, Research Analyst, Commodities and Currency at Emkay Global Financial Services, projected a medium-term upside for the yellow metal.

"A medium-term target for gold prices in the international markets is at USD 3,850-4,000 per ounce level, especially if US inflation continues to cool and Fed cuts proceed as projected," she said.

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 Rs 1,30,096 per kilogram, while in overseas markets the white metal rose nearly 2 per cent to settle at USD 42.95 per ounce on Saturday. It touched an high of USD 43.43 per ounce earlier in the week.

"Silver has been carving out a more aggressive trajectory than gold. The prices are nearly at USD 43 per ounce-mark, the first sustained break above the USD 40 level since 2011, reflecting both investment inflows and supply constraints," Riya Singh said.

Industrial applications have emerged as a key growth driver for silver. Demand from solar panel manufacturing has surged as photovoltaic installations expand globally.

"Silver's share of module cost has tripled in two years, raising concerns for solar producers but tightening the physical market. Demand from electric vehicles, 5G infrastructure and battery storage continues to grow at double-digit rates, offsetting weaker photographic and jewellery demand," she added.

On the supply side, mine production has remained stagnant over the past five years and is concentrated in a few regions, leaving the market vulnerable to disruptions.

"Silver prices could target USD 49-50 per ounce in the coming months in the overseas markets in the near term," Singh said.

Pranav Mer of JM Financial Services echoed similar views, projecting that silver prices in the domestic market have an upside potential to test Rs 1,40,000-1,50,000 per kilogram.

With the US Federal signalling a softer policy stance, global demand drivers strengthening, and Asian festive buying underway, bullion markets appear poised to retain momentum in the weeks ahead. However, analysts caution that volatility could persist given the interplay of US data releases, currency movements, and geopolitical developments.