Gold, Silver Sparkles Amid Volatile Stock Market; 24 Carat Crosses Rs 64,000 Per 10 Grams; What To Expect?

Prices of precious metals sparkled on January 2nd amidst a volatile stock market. On Tuesday, 24-carat gold crossed its Rs 64,000 psychological mark and even reached nearly Rs 64,100 per 10 grams. While 22 carat and 18-carat gold were also up. MCX gold and silver prices zoomed by 0.4% to 1%. Broadly, gold prices globally kickstarted the New Year on a positive note, while equities have seen a cautious tone coupled with the dollar which is trying to recover from its 5-month low and build-up in treasury yields.

The fuelling factor for precious metals to their record highs would be expectations of rate cuts from the Fed followed by other major central banks as the latest rates hike cycle is seen to peak out amidst cooling inflation and a surge in economic growth.

Safe haven assets like gold and silver technically have opposite co-relation. Although not entirely impacted by key rates, prices of precious metals tend to rise amidst rate cuts and drop in the case of rate hikes. Notably, rates hike usually make other investment pools like government bonds, yields and dollars more attractive than gold. While lower rates increase appetite for gold and increase demand among investors.

Gold, Silver Prices In India On January 2nd:

22-carat gold in 10 grams surged by Rs 200 to Rs 58,750 on Tuesday compared to the previous day's print of Rs 58,550 per 10 grams. While prices of 22-carat in 1 gram to 100-grams zoomed by Rs 20 to as high as Rs 2,000.

Coming to the 24-carat gold, the price of 10 grams soared by Rs 220 to Rs 64,090 compared to Rs 63,870 the previous day. Meanwhile, prices of 1 gram to 100 grams of 24-carat gained by Rs 22 to Rs 2,200.

Furthermore, 18-carat gold jumped by Rs 170 to Rs 48,070 per 10 grams versus Rs 47,900 per 10 grams of the previous day. Prices of 1 gram to 100 grams in this carat climbed by Rs 17 to Rs 1,700.

Also, silver prices in 1 kg advanced by Rs 300 to Rs 78,900 on Tuesday from the previous day's Rs 78,600. Prices of 1 gram to 100 grams of silver in retail shops in India broadly surged by Rs 0.30 to Rs 30.

MCX gold, and silver prices on January 2:

MCX gold prices with February expiry traded near their intraday high of Rs 63,588 per 10 grams. The price was currently at Rs 63,562, up by Rs 242 or 0.4% from the previous day.

Meanwhile, silver price with March expiry touched Rs 75,000 levels before trading at Rs 74,967 per 1 kg, up by Rs 577 or 0.8% from the previous day.

Spot Gold, US Gold Futures:

Spot gold in the UK rallied by 0.6% to trade at $2,075.12 an ounce. The day's range is between $2,062.39 - 2,076.76 per ounce.

While US gold futures with February expiry also jumped by 0.6% to trade at $2,083.90 an ounce. The Tuesday range for this bullion was between $2,071.40 - 2,085.30 an ounce.

What's Driving Gold, Silver Prices And Their Outlook This Week?

According to SMC Global Securities, gold is poised to benefit in 2024 from lower US rates and a struggling global economy. Projections suggest a trading range of 62,000-64,000 for gold and 73,000-78,000 for silver.

Further, SMC's note said that anticipation for rate cuts has solidified following cooler inflation data, with traders now pricing in an 88% likelihood of monetary policy easing by March, according to the CME FedWatch tool. The attractiveness of gold is further amplified as lower interest rates diminish the opportunity cost of holding non-yielding bullion. Additionally, the Dollar Index is on track for its weakest yearly performance in three years, enhancing gold's appeal for holders of other currencies. Looking ahead, there's a looming threat to financial stability in the form of refinancing risk.

If this risk prompts disturbances in credit markets, SMC's note added that compelling the Fed to swiftly increase stimulus measures, gold is likely to experience a rapid ascent. On the Comex, gold prices are currently trading around 2080 levels. A break and sustained rise above $2100 could propel prices to $2140 and $2170, with 2020 serving as a crucial support level. Silver, in parallel, might find support near $22.65 and encounter resistance around $24.66.

This week, the brokerage's note gold prices are anticipated to see buying interest from lower levels, finding support around 62200 levels and facing resistance near 64000 levels. Silver, in a similar trajectory, may trade within the range of 72500 levels, with resistance expected near 76700 levels.

Last year, bullion prices soared by 13%, which will be their first annual upside since 2020. Meanwhile, the US dollar dipped 2% in 2023.

For 2023 performance, SMC's note said, gold had an impressive performance this year, marking its best in three years. This surge was driven by growing expectations of U.S. interest rate cuts early in 2024, coupled with heightened global uncertainties such as the war in Ukraine and tensions in the Middle East, which bolstered safe-haven demand. As the year concludes, gold prices are poised to end near current levels, with the key determinant for the upcoming year being the timing and extent of Federal Reserve interest rate cuts.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.