Gold, Silver Prices Rise On Gurunanak Jayanti; What Will Drive Precious Metals This Week?

Gold prices in India surged right from 18 carats to 24 carats on Monday due to the heavy demand on the occasion of Gurunanak Jayanti. Trading in the stock market and banks are closed. Owing to the weakening in the dollar index, gold prices have recorded second consecutive weekly gains up till now. In the holiday-shorten week from November 27th to December 1st, MCX gold prices are likely to find support in the range of Rs 59000-62000 levels, while silver is seen to range from Rs 70500-74500 levels.

On November 27th, 22-carat gold in 10 grams is priced at Rs 57,350, up by Rs 250 from the previous day's price of Rs 57,100. Prices of 1 gram to 100 grams in 22 carats also climbed by Rs 25 to Rs 2,500.

Meanwhile, 24-carat gold is available at Rs 62,560 per 10 grams, higher by Rs 270 from Rs 62,290 of the previous day. Here, prices of 1 gram to 100 grams of gold have jumped by Rs 27 to Rs 2,700.

As for 18-carat gold, the price of 10-gram has surged by Rs 202 to Rs 46,920 compared to the previous day's Rs 46,718. 1-gram to 100-grams of 18 carats also got costlier by Rs 20.20 to Rs 2,020.

Coming to silver prices, per 1 kg has jumped by Rs 1,300 to Rs 78,500 compared to the previous day's price of Rs 77,200. Silver prices from 1 gram to 100 grams have soared by Rs 1.30 to Rs 130.

Today, many regions of India are celebrating Gurunanak Jayanti which means the birthday of Guru Nanak Dev Ji Gurpurab, also known as Guru Nanak Dev Ji Prakash Utsav, who was an important Sikh guru and the founder of Sikhism. Demand for precious metals is usually high during the festive season.

Also, a rally in international prices lifted sentiments for gold and silver at home. On Monday, spot gold in London jumped 0.7% to $2,015.09 an ounce in early trade, while US gold futures maturing in December zoomed by 0.6% to Rs 2,015.80 an ounce. These prices continued to gain traction as the dollar stayed weak against a basket of currencies. The US currency is down by 0.1% and nearing its over 2-months low levels, on the backdrop of expectations that the Fed's latest rate hike cycle has peaked.

Since the stock and commodities markets are closed today in India, MCX, gold futures maturing on December 5, stood at Rs 61370 per 10 grams, rising by Rs 298 or 0.5% on November 24th. That being said, MCX's gold price is Rs 544 per 10 grams away from clocking the all-time high of Rs 61,914 which was recorded in November this year. Furthermore, MCX silver also rose by a whopping 1.40% or Rs 1,017 on November 24th to Rs 73,915 per 1 kg.

Gold Weekly Outlook:

In its outlook report, SMC Global Securities said, "Gold prices marked their second consecutive weekly gain, buoyed by a weakening U.S. dollar and growing confidence in the Federal Reserve's conclusion of interest rate hikes. The dollar index was poised for a second consecutive weekly decline, rendering gold more affordable for holders of other currencies.

SMC's note highlighted that market optimism regarding the Federal Reserve's stance on interest rates increased as expectations for rate cuts in 2024 diminished, following data indicating a larger-than-anticipated drop in new claims for unemployment benefits in the previous week.

Furthermore, it said, despite robust jobs data, concerns lingered about a slowing U.S. labor market amid elevated interest rates. Earlier in the week, the release of Fed minutes indicated a cautious approach, stating that the central bank would proceed "carefully," with unanimous agreement among participants to maintain the current rate setting.

Market traders widely anticipate the Fed to keep rates unchanged in December, with approximately a 26% probability of a rate cut as early as March, according to CME's Fed Watch Tool, it pointed out.

Accordingly, SMC's note said, "A notable discrepancy exists between market expectations for rates and the information presented in the Fed minutes, introducing some uncertainty into the gold price. The reduction in interest rates diminishes the opportunity cost associated with holding gold. In the spot gold market, a potential retest of resistance at $1,999 per ounce is anticipated, with a breakthrough possibly leading to further gains in the $2,009-$2,016 range."

For November 27th to December 1st, the brokerage said, prices on the MCX is expected to maintain a range of 59000-62000 levels, with a recommended strategy of buying on dips. Conversely, silver prices are likely to sustain a positive bias, finding support in the range of 70500-74500 levels.

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.