Gold rate outlook: Prices stay firm as Fed decision nears; analysts say rupee weakness adds support

Gold prices are expected to remain on a positive footing in the coming week as investors await cues from the US Federal Reserve’s monetary policy decision, with a weaker rupee adding to support in the domestic market, analysts said, PTI reported.

The bias for the yellow metal remains constructive amid expectations of an interest rate cut by the Fed and continued purchases by central banks. “Gold is expected to remain on the positive side as traders will be focusing on the US Federal Reserve's FOMC meeting outcome and the Fed Chair Jerome Powell's commentary,” said Pranav Mer, Vice President, EBG – Commodity & Currency Research at JM Financial Services Ltd, adding that China’s trade and inflation data and US jobs numbers will also be watched closely.On the Multi Commodity Exchange (MCX), gold futures gained Rs 958, or 0.74 per cent, during the week, outperforming global prices. Analysts attributed this outperformance largely to currency movements. “Gold prices in the Indian markets have rallied more than the Comex gold prices on account of rupee depreciation against the dollar. The rupee is now at the highest mark of 90, which makes gold in Indian currency costlier,” Prathamesh Mallya, DVP – Research, Non-Agri Commodities and Currencies at Angel One, said, PTI quoted.

Mallya added that the rally could extend further, supported by expectations of a rate cut, rising central bank demand and fund buying. In contrast, Comex gold futures edged lower by $11.9, or 0.28 per cent, over the week. Mer said global prices largely consolidated within a range but remained supported by a weaker dollar and growing bets of a Fed rate cut at its December 10 meeting.Meanwhile, silver continued to outperform gold, touching fresh record highs on strong industrial demand.

On the MCX, silver futures surged Rs 8,427, or 4.81 per cent, during the week. On Friday alone, prices jumped Rs 7,096, or 3.98 per cent, to hit a record Rs 1,85,234 per kilogram.“In the first half of the week, silver futures spiked close to Rs 1.80 lakh per kg and briefly touched fresh highs. Since then, prices have cooled off slightly but are still sitting on massive month-on-month gains,” said Chirag Doshi, CIO – Fixed Income at LGT Wealth India.

He added that markets are consolidating at elevated levels, with traders increasingly using sharp intraday spikes to book profits.In overseas markets, Comex silver futures rose $1.89, or 3.30 per cent, during the week, and climbed $2.4, or 4.19 per cent, on Friday to a lifetime high of $59.90 per ounce. “Silver prices rose to yet another all-time high and moved close to $60 per ounce in the international market, while on the domestic market, prices rose close to Rs 1,90,000 per kg,” Mer said, citing strong industrial demand and tight supplies.Mer added that the momentum could push domestic silver prices towards Rs 2,00,000–2,25,000 levels in the short term. Analysts said the coming week will be crucial for bullion markets, with Fed policy cues, macroeconomic data from China and the US, and rupee trends guiding price direction.