Gold and silver prices could maintain their upward momentum with a positive bias in the coming days, according to Maneesh Sharma, AVP of Commodities and Currencies at Anand Rathi Shares and Stock Brokers. Sharma shared his outlook for the precious metals, highlighting several key factors driving the current rally.
Record Highs Amid Federal Reserve Turmoil
Gold and silver surged to record levels this week in a broad-based metals rally. This movement followed news that the US Justice Department threatened the Federal Reserve with a criminal indictment. The development revived serious concerns about the central bank's independence from political pressure.
Federal Reserve Chair Jerome Powell addressed the situation earlier in the week. He stated that the potential indictment comes amid what he described as threats and ongoing pressure from the administration. This pressure aims to influence interest-rate decisions, Powell explained.
Geopolitical Tensions Boost Safe-Haven Assets
Geopolitical tensions remained elevated throughout the week, providing strong support for safe-haven assets like gold. Deadly protests in Iran introduced a fresh layer of uncertainty into global markets. The key risk involves the prospect of renewed US involvement in the region, which could further destabilize the situation.
Structural support for gold prices remains robust. China's central bank extended its gold-buying streak to fourteen consecutive months. This sustained purchasing tightens available supply in the global market, creating upward pressure on prices.
US Economic Data Provides Mixed Signals
Recent US macroeconomic data showed the economy added 50,000 jobs in December. This figure fell below consensus expectations. Job growth disappointed analysts, though the unemployment rate edged down slightly.
Gold prices ended last week with an impressive 4.10 percent gain. The weaker-than-expected jobs data contributed to this performance by reinforcing expectations for potential interest rate cuts.
Inflation Data and Rate Cut Expectations
US Consumer Price Index numbers showed inflation remaining steady. However, Core CPI edged down on both yearly and monthly bases. This decline indicates that more interest rate cuts could persist throughout this year.
Market focus now shifts to Producer Price Index numbers scheduled for release later this week. These figures will provide further direction for precious metal prices.
Gold and Silver Price Outlook
Sharma provided specific outlooks for both metals. For gold, currently trading around $4,579 per ounce, he maintains a positive bias. Silver, trading at approximately $86.50 per ounce, presents buying opportunities on dips.
Sharma believes silver could reach levels between $90 and $95 within one to two weeks. The metal breached all-time highs yesterday at $84.01 per ounce in spot trading during the last week of December.
Technical Charts Show Bullish Breakouts
Silver appears set to rally further based on bullish breakouts visible on technical charts. The metal looks increasingly positively biased for the next month. Sharma suggests levels of $95 to $98 per ounce appear achievable within a two to three week timeframe.
In Indian markets, MCX futures might rally further toward Rs. 2,95,000 to Rs. 3,00,000 per kilogram levels.
Ongoing Risks and Market Developments
Repeated attacks on the Federal Reserve by the Trump administration propelled gold and silver to successive peaks last year. This driver looks set to persist throughout the current year as well.
A potentially bigger risk to the Fed emerges on January 21st. The Supreme Court will hear oral arguments in the case against Fed Governor Lisa Cook on that date.
More than a dozen money managers stated they have opted not to take too much money off the table in gold. They maintain strong conviction in the metal's long-term appeal despite recent gains.
Trade Policy Decisions Loom
The US Supreme Court set Wednesday for the next possible opinion day regarding President Donald Trump's tariffs. A ruling against these levies would undercut his signature economic policy. Such a decision would represent his biggest legal defeat since returning to the White House.
Traders also await results from the so-called Section 232 investigation. This probe may lead to US tariffs on silver, platinum, and palladium, potentially disrupting precious metals markets.
All eyes remain on upcoming US economic data for further direction. Both CPI and PPI numbers will influence precious metal prices in the near term.
Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India.
