- Gold prices in India rose over 1% to Rs 1,50,381 per 10 grams on easing Fed rate hike fears
- Silver prices surged nearly 3%, hitting Rs 2,32,502 per kg amid tight physical supply conditions
- Global gold gained 0.6%, reaching a seven-week high near $1,262 per ounce on weak oil prices
Gold and silver prices in India jumped on Friday, following gains in international bullion prices, as easing geopolitical tensions and falling oil prices eased expectations of further Federal Reserve tightening.
MCX gold rate for October futures contracts traded higher by Rs 1,523, or 1.02%, at Rs 1,50,381 per 10 grams. It hit a high of Rs 1,50,487 level. MCX silver price for September futures contracts traded at day's high level of Rs 2,32,502 per kg, up by Rs 6,666, or 2.95%.
In the international markets, gold prices were on track for their biggest weekly gain since January, helped by weaker oil prices. Investors also awaited key US nonfarm payrolls data for clues on the US Federal Reserve interest rate outlook.
Spot gold price rose 0.6% to $4,262.39 per ounce, after hitting a seven-week high in the previous session. US gold futures gained 0.5% to $4,321.50. Spot silver price rallied 1.3% to $62.27 per ounce.
Meanwhile, traders currently see a 55% chance of a US Fed rate hike in September, from 63% a week ago, per the CME FedWatch Tool.
Focus now shifts to the US non-farm payrolls for July which will come later today.
Why is Silver Price Rising?
Vanadana Bharti, Head of Commodity Research, SMC Global Securities noted that the silver price's recent strength is being supported by a tightening physical market, as major global inventories remain under pressure, while industrial demand continues to absorb large quantities of silver.
“With annual industrial consumption estimated at around 650 million ounces, the reported 67 million-ounce structural deficit highlights how supply is struggling to keep pace with demand,” said Bharti.
However, MCX silver price has lagged COMEX despite the global rally due to the nearly 1.5% appreciation in the Indian rupee, combined with discounts in the domestic spot market.
“This looks more like a currency-driven adjustment than a sign of weak underlying demand,” she added.
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Silver Price Outlook
Jigar Trivedi, Senior Research Analyst at IndusInd Securities, maintains a bullish outlook on MCX silver price and expects the white metal to trade with a positive bias ahead of the Indian Festival season. He recommends ‘buy on dips' strategy for silver.
“From industrial metal point of view, silver prices may get an additional support as China's PBoC reassured ample liquidity to support growth.
According to him, MCX silver price may find support at Rs 2,26,000 – Rs 2,25,000 levels, while resistance is placed at Rs 2,30,000 – Rs 2,32,000 levels.
Technically, MCX silver price has rebounded marginally from its recent dips, inclined by more than 6% so far in this week and likely to continue its upward momentum.
“MCX silver price has sustained over 50-EMA on Weekly chart placed at Rs 2,13,400 and managed to hold after a consolidation of past weeks. Here, we can observe a formation of Bullish engulfing on Weekly timeframe,” said Aamir Makda, Commodity & Currency Analyst - Technical Research, Choice Broking.
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Gold - Silver ratio has dropped to 67.50:1 in today's session, indicating outperformance of silver compared to gold.
“Crucial resistance for silver would be at 100-DEMA level placed at Rs 2,35,640 and breakout above this mark will accelerate bullish trend in silver,” he added.
Vanadana Bharti believes from an investor's perspective, the Rs 2.10 lakh area has emerged as an important base for MCX silver, and if physical tightness, institutional ETF buying and industrial demand continue to support the market, silver price could make another strong move toward Rs 2.50 lakh – Rs 2.60 lakh in the coming weeks.
Gold Rate Outlook
Jigar Trivedi expects MCX gold price to see support around Rs 1,49,000 level, while support for Comex gold is placed near $4,220 - $4,180 level. On the flip side, $4,280 - $4,320 is resistance.
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