Silver and Gold Prices Decline Amid Strong US Economic Data
Silver and gold prices extended their downward trend on Thursday, February 12, as the US dollar strengthened following stronger-than-expected January jobs data. This development has weakened hopes for near-term interest rate cuts, shifting investor focus to upcoming inflation data scheduled for Friday, which is expected to provide further clues on the future direction of monetary policy.
Market Performance and Price Movements
On the Multi Commodity Exchange (MCX), silver prices fell by 1% to ₹2,60,453 per kilogram. Meanwhile, gold prices declined by 0.66% to reach the day's low of ₹1,57,701 per 10 grams. In the international market, spot silver dropped 1.4% to $82.87 per ounce, retreating after a sharp 4% rally in the previous session. Spot gold eased 0.4% to $5,058.64 per ounce by 0134 GMT, following a rise of more than 1% on Wednesday. Additionally, U.S. gold futures for April delivery slipped 0.3% to $5,080.0 per ounce.
Among other precious metals, spot platinum declined by 1% to $2,110.63 per ounce. In contrast, palladium bucked the trend, gaining 0.4% to trade at $1,707.17 per ounce.
Key Factors Driving the Decline
The U.S. dollar index advanced further, extending Wednesday's rally after a surprisingly strong employment report indicated resilient underlying economic conditions in the United States. Data revealed that U.S. job growth accelerated unexpectedly in January, with the unemployment rate slipping to 4.3%.
On the geopolitical front, after discussions with Israeli Prime Minister Benjamin Netanyahu on Wednesday, U.S. President Donald Trump stated that no "definitive" agreement had been reached on how to proceed with Iran. However, he added that negotiations with Tehran would continue in an effort to reach a possible deal.
Furthermore, a Reuters poll suggested that the U.S. central bank is likely to hold interest rates steady through the tenure of Chair Jerome Powell, which ends in May, before potentially cutting rates in June. Economists participating in the poll cautioned that policy under his likely successor, Kevin Warsh, could turn overly accommodative.
Future Outlook and Investor Considerations
Looking ahead, market participants are awaiting weekly jobless claims data due later on Thursday, followed by key inflation numbers scheduled for Friday. These releases are expected to offer clearer signals on the Federal Reserve's policy trajectory, influencing precious metal prices and investment strategies.
For investors, the current market conditions highlight the importance of monitoring economic indicators and geopolitical developments. While silver and gold have faced pressure from a strong dollar and robust jobs data, their role as safe-haven assets remains relevant. Portfolio allocation should consider factors such as inflation expectations, interest rate trends, and global economic stability, with diversification being key to managing risk in volatile commodity markets.
