Gold and Silver Prices May Take a Breather Next Week
Gold and silver prices may take a breather next week as investors turn cautious ahead of key U.S. macroeconomic data, including GDP numbers, while thin year-end trading volumes are expected to limit price movements, analysts said.
Investors will also closely track the US housing data numbers, core durable goods, and consumer confidence figures, which will steer the global bullion prices, they added.
US Economic Data to Influence Gold and Silver Prices
The release of key US economic data, including GDP numbers, is expected to influence the prices of gold and silver. Gold prices and silver prices have been on a rally in recent weeks, with gold futures on the Multi Commodity Exchange rising Rs 574, or 0.43%, over the past week.
The US economic data release is expected to provide insights into the state of the US economy, which will, in turn, influence the prices of gold and silver. A strong economy is likely to lead to higher interest rates, which could negatively impact gold and silver prices.
Thin Year-End Trading Volumes to Limit Price Movements
Thin year-end trading volumes are expected to limit price movements in the gold and silver markets. With many traders and investors taking a break for the holiday season, trading volumes are expected to be lower than usual, which could lead to increased volatility in the markets.
According to Pranav Mer, Vice President, EBG – Commodity & Currency Research, JM Financial Services Ltd, "Moving into the Christmas week, traders expect some consolidation or correction in the markets as volumes are expected to remain low with major traders staying away due to a long-weekend starting late on Wednesday. However, volatility/price swing may be higher due to low participation."
Global Markets to Witness Subdued Activity
Several global markets are likely to witness subdued activity in the coming days as investors stay on the sidelines ahead of the Christmas and New Year holidays, an expert said.
The global markets are expected to be influenced by the release of key economic data, including GDP numbers, which will provide insights into the state of the global economy.
Gold Futures Advance Modestly
Gold futures on the Multi Commodity Exchange rose Rs 574, or 0.43%, over the past week, extending an unusually persistent rally. According to Pankaj Singh, smallcase manager, Founder and Principal Researcher, SmartWealth.AI, "Gold futures advanced modestly across domestic and international exchanges this week, extending an unusually persistent rally."
The gold futures rally has been driven by a combination of factors, including a weak dollar, dovish federal reserve, and lower inflation data in the US.
Silver Futures Outperform Gold
Silver futures have outperformed gold this year, with the white metal zooming Rs 15,588, or 8.08%, during the past week, climbing to touch a lifetime high of Rs 2,08,603 per kilogram on Friday before retreating slightly on profit booking.
The silver futures rally has been driven by a combination of factors, including persistent flows into exchange-traded funds globally and concerns about the unwinding of yen carry trades after the Bank of Japan’s expected rate hike.
Medium-Term Outlook for Gold and Silver
The medium-term outlook for both gold and silver remains constructive, with Pranav Mer saying that the risk-reward remains unfavorable for silver as it appears stretched after its strong rally.
According to Pranav Mer, "Silver remains positive, but risk-reward remains unfavorable. In the near-term prices may test Rs 2,25,000-2,45,000 per kilogram. On the technical front… We continue to maintain a positive view on gold and expect prices to rise further to Rs 1,40,000-1,45,000 by early next year, with support for reversal placed at Rs 1,29,000 per 10 grams."
Investors can stay up-to-date with the latest news and trends in the gold and silver market by following reliable sources of information, such as commodity market news and financial news websites.