Gold Prices Mark 3rd Weekly Gains, 24-Carat At Record Rs 63,760; Buying Trend In Bullion To Continue?

Prices of yellow metal has continued to shine for three-consecutive weeks, reaching new record highs and also outperforming its counterpart silver. With upside in gold, dollar index has been struggling with a downside for three weeks in a row. Appetite in safe haven increased after Fed officials signalled that recent cooling in inflation rate may lead to end in rate hike cycles, which was not spontaneously taken well by dollar. In the trading week from from December 4th to 8th, bulls are likely to continue in bullions.

On December 3rd, 24-carat gold was available at Rs 63,760 per 10 grams, while 22-carat and 18-carat gold were priced at Rs 58,450 and 47,820 respectively. The prices were steady across India.

At MCX, gold futures with December expiry ended broadly flat at Rs 63,355 per 10 grams, while silver prices with March expiry dropped by Rs 122 or 0.2% to Rs 77,965 per 1 kg. Meanwhile, on the global front, spot gold in London soared by 1.57% to over $2,072 an ounce, while US gold futures with December expiry skyrocketed by 1.72% to $2,073.20 an ounce.

Currently, gold prices are at lifetime high levels in India.

Further, on international prices which play a key role in dictating the mood of domestic bullion prices, Arvinder Singh Nanda, Senior Vice President, of Master Capital Services said, "Gold prices touched 6 month high due to a weaker US dollar and a pause in the hike in interest rates by Fed reserve."

Meanwhile, in its weekly outlook report, SMC Global Securities said, "Gold marked its third consecutive weekly increase, driven by indications of easing inflation in the U.S. that strengthened expectations for an upcoming interest rate cut.

Also, the brokerage pointed out that recent data revealed a moderate rise in U.S. consumer spending for October, coupled with the smallest annual increase in inflation in over 2.5 years. The Federal Reserve's potential shift towards rate cuts gained traction, supported by cooling inflationary pressures and a more relaxed labor market, as highlighted by two Fed officials this week.

Likewise, it said, traders adjusted their predictions for a rate cut by the U.S. central bank, with CME's FedWatch Tool showing a shift from an 80% chance in May to a one-in-two chance in March.

SMC's note explained that lower interest rates contributed to gold's appeal, as they decrease the opportunity cost of holding non-interest-bearing assets like bullion.

Additionally, month-end flow and seasonal trends favoring gold gains between November and December played a role. The dollar index and 10-year Treasury yields saw declines, with the dollar recording its weakest monthly performance in a year in November.

On the geopolitical tensions, SMC's note added, geopolitical developments in the Middle East, particularly regarding Israel's plans to resume conflict with Hamas, were monitored by markets.

Furthermore, the U.S. PCE price index rose 3% in October compared to a year ago, indicating a slowdown from the 3.4% gain observed in the preceding three months.

For this week (December 4-8th), SMC's note said, "On COMEX, gold prices continued their upward trend, potentially finding support near $2020 and facing resistance around $2090. Silver also witnessed bullish movement, with expected support near $23.00 and potential resistance around $27.10. Looking ahead, gold prices on MCX were anticipated to trade in the range of 60500 to 63400, while silver could fluctuate between 74000 and 81000, with a buying-on-dips strategy advised."

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