The yellow metals market is experiencing a significant uplift, with gold hitting a three-week high and silver showing a marked upsurge, largely driven by growing expectations of an imminent interest rate cut by the US Federal Reserve.
While geopolitical issues continue to simmer, the prospect of the Trump administration resolving the US government shutdown is contributing to a complex, yet overall positive, signal for commodity trends. Despite recent price volatility, investor sentiment is clearly driving the forces in favor of precious metals.
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Gold has breached the $4,130 per ounce mark, reaching a three-week peak, fueled by heightened economic uncertainty in the U.S. Jigar Trivedi, Senior Research Analyst at Reliance Securities, explains this movement: “Gold hits three weeks high on Dovish Fed bets.” Recent weak economic indicators, including data showing job losses in October—particularly in government and retail sectors—and consumer sentiment falling to a 3½-year low in early November, have intensified expectations for near-term monetary easing.
Traders are currently pricing in about a 64% chance of a 25-basis-point Fed cut in December. This expectation is being supported by influential figures, with Fed Governor Stephen Miran advocating for a larger half-point reduction amid falling inflation and rising unemployment. Trivedi projects that MCX Gold December is likely to appreciate Rs. 125,000/10g, with Rs. 124,000/10g serving as intraday support. However, the Senate’s tentative deal to reopen the federal government after a 40-day shutdown may slightly reduce gold’s safe-haven appeal.
Silver has mirrored gold’s trend, surging by 4.04% to Rs 1,53,691. Kedia Advisory noted that the surge came “amid rising expectations of a U.S. interest rate cut and persistent uncertainty over the American economic outlook.” The safe-haven demand for precious metals was boosted by weak U.S. private job data and a steep decline in the University of Michigan Consumer Sentiment Index, which fell to 50.3 in November—its lowest level since June 2022.
Market participants are pricing in nearly a 66% probability of a 25-basis-point rate cut in December. Additionally, global optimism was supported by China’s decision to suspend additional export controls on some rare earth metals and lithium components. On the physical side, London silver inventories saw a 6.8% rise, valued at $41.3 billion, due to inflows from the U.S.
The overall trading ranges are set at Rs 120,915-Rs 125,685 for gold and Rs 148,035-Rs 156,705 for silver. The continued support for both metals stems from expectations of a Fed rate cut and concerns over a global economic slowdown, despite some counter pressure from potential political resolutions in the US.
