Gold and silver prices surged on Wednesday after the latest US inflation data eased concerns over immediate Federal Reserve rate hikes, while a weaker dollar and renewed central-bank buying further supported demand for precious metals.
Spot gold rose 1.43% to $4,432.39 an ounce, while Gold Comex gained 1.01% to $4,485.80. Silver outperformed gold, with Spot Silver rising 2.44% to $66.26 and Silver Comex also gaining 2.44% to $66.52.
The rally came after US inflation data showed price pressures remained relatively contained. The consumer price index, excluding the volatile food and energy categories, increased 0.2% month-on-month, according to data from the Bureau of Labor Statistics. On an annual basis, core CPI rose 2.5%, matching its slowest pace since March 2021.
Why Gold And Silver Are Rising
The inflation data provided relief to markets after a weak July US jobs report had already increased expectations that the Federal Reserve may have less reason to tighten monetary policy further.
The moderation in price growth could help ease inflation concerns among Fed policymakers, particularly after three officials dissented at the July 29 meeting in favour of raising interest rates. Lower expectations of further rate increases tend to support non-yielding assets such as gold, while a weaker dollar can make dollar-denominated commodities more attractive to overseas buyers.
What Analysts Have To Say?
Kotak said the rally was supported by expectations that softer inflation could reduce the Federal Reserve's incentive for further tightening. The brokerage also highlighted a weaker dollar and renewed central-bank buying, particularly from China, as additional drivers of investor demand.
Geopolitical uncertainty has also remained supportive for precious metals. Kotak noted that Pakistan's defence minister had indicated that the US and Iran were close to an arrangement to reopen the Strait of Hormuz, although conflicting positions from both sides continued to leave the outcome uncertain.
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Kotak expects Spot Gold to face resistance at $4,452.70, followed by $4,474.20 and $4,383.20. On the downside, support is seen at $4,292.30, followed by $4,361.80 and $4,543.60.
For MCX Gold October futures, resistance is placed at Rs 1,55,856, Rs 1,56,374 and Rs 1,58,048. Support levels are seen at Rs 1,54,182, Rs 1,53,664 and Rs 1,51,990.
The technical setup suggests that gold could remain supported if it sustains above its key support levels, while a decisive move beyond the immediate resistance could open the door for further gains.
Silver has outperformed gold in the latest move, with both Spot and Comex Silver gaining around 2.44%. Kotak sees resistance for Spot Silver at $67.35, followed by $67.96 and $69.92. Support is placed at $65.38, $64.78 and $62.81.
On MCX, Silver is expected to face resistance at Rs 2,42,290, Rs 2,43,730 and Rs 2,48,391. Support is seen at Rs 2,37,628, Rs 2,36,188 and Rs 2,31,527.
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